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Efficient, reliable, and professional taxation service to small businesses, investor groups, and Non-Resident Owners of US Real Estate

New Rental Homeowners

Now that you own your foreign rental home, there are a number of matters to focus your attention on, in order to ensure you are tax and legally compliant in the operation of your rental business. These procedures are mandatory and the authorities involved have powers to enforce severe penalties for non-compliance. Set out below are the steps required to ensure compliance and OAS will help by providing advice and guidance with all these matters and any concerns regarding your US investment.

Consult A US Tax Specialist

All rental Homeowners who receive more than 2 weeks rental income, leaseback arrangements included, must file a US Tax Return in addition to any tax filing requirements in their home country. The filing of US tax returns very rarely ends up in the payment of a Federal tax bill, due to the generous tax deductible allowances available to offset rental income. While the filing of these US Tax Returns is mandatory, the losses declared previously will now be to your benefit when you decide to sell the property - the losses will reduce dollar for dollar, any Capital Gains Tax due at the time of sale.

Hiring OAS, who have many years experience in US tax filing (and who can also assist in the reporting of your foreign rental income and costs in UK Tax Returns), makes sense- we are tax specialists and will provide advice and guidance throughout the whole process of buying, renting and selling.

ITIN (Individual Tax Identification Number) Application

All rental property owners in the US are required to have an ITIN (Individual Taxpayer Identification Number). The ITIN application is normally made at time of purchase, or shortly afterwards. We apply for this, as part of our overall service. We are Certified Acceptance Agents and have close links with the IRS and can ensure the ITIN application process is successful.

Sales Taxes Registration

New Rental owners must register with the State and County Sales tax authorities as all income based rentals are subject to Florida Sales taxes, whether they originate in the State or from your home country

Florida Rental Licenses

All short-term rental properties in Florida require 2 licenses to operate. The first license is issued by the State and the second is a County license -both are renewed annually.

Taxes that affect vacation rental homes:

  • Federal Income Tax, filed annually by non-resident homeowners. (Deadline for filing to the IRS is June 15th.)
  • Real Estate Tax (payable annually to the County Tax Collector’s office and due by March 31st.) The term Real Estate refers to tax on real property. In the case of vacation homeowners, Real Estate refers to land, dwelling, fixtures and any other improvement to the land.
  • Local Business Tax concerns homeowners who rent out their US property and receive direct rental payments. (Payable annually to the County Tax Collector)
  • Sales & Use Tax (payable monthly to Florida Department of Revenue, due by the 1st of the month)
  • Tourist Development Tax (payable monthly to the County Tax Collector by the 1st. of the month)
  • Tangible Personal Property Tax (due annually, by March 31st.) The rules affecting TPPT have recently changed. With effect from January 1st. 2008, homeowners whose furniture, fixtures and equipment has been assessed at less than $25,000, will no longer have to pay this tax.
  • State resort dwelling license (due once per year). Short-term rental homeowners must obtain this license from the Florida Department of Business & Professional Regulation, prior to renting out the property.Generally, the application and renewal of these licenses is dealt with by your management company.

The Tourist Development Tax Academy has published a document which clearly outlines these taxes and emphasizes the importance of paying US taxes on time.

This document known as the Central Florida Vacation Rental homeowner’s Guide can be found on the website www.PolkTaxes.com

Homeowners are warned: “Mistakes or avoiding compliance can prove costly and even lead to the loss of your vacation home”

The guide strongly advises vacation homeowners to consult with tax professionals before filing Federal Income Tax Returns.

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