"Rent includes sales tax" Calculations

[DARFAP]

So if I charge X amount of $$ for a rental fee and state that it includes sales tax, do I reverse calculate how much the rent charge is in order to figure out what the sales tax is? The FL DoRevenue website does not get this specific.

[jane032657]

My husband is a CPA and says this is correct.

If sales tax is 7%,you divide by 1.07.

If the rent is $1000 you divide by 1.07:
$934.58 for the rent and the difference between that and the $1000 would be the tax.

You just divide the total by 1.07 or whatever the sales tax is.

[folkh]

My husband is a CPA and says this is correct.

If sales tax is 7%,you divide by 1.07.

If the rent is $1000 you divide by 1.07:
$934.58 for the rent and the difference between that and the $1000 would be the tax.

You just divide the total by 1.07 or whatever the sales tax is.

Are you sure the tax would not be $70.00 if the tax is 7% and the rent is $1000.00?

[borjo]

Jane is correct, except in Sumter Co. the tax is 9%. I did it that way the many years I had my rental. It's nicer for the customer, they know exactly how much it will be without any add ons. You count both the rent as your income and the tax as your expense for taxes. Your rent will be lower than some but including tax, is a great plus.

[Indydealmaker]

Are you sure the tax would not be $70.00 if the tax is 7% and the rent is $1000.00?

The premise is that the monthly rent amount "includes" tax. Since you cannot charge tax on a tax. The monthly rent amount must be less than $1000 with the remainder being the tax. It is the same thing as saying the monthly rent is:
$934.58 plus sales tax of $65.42 (934.58 x .07)

[Bonanza]

Unless the law has changed, sales tax is only charged if the rental term is less than six months.

[rjm1cc]

Don't know FL law but most states say tax has to be shown as a separate entry on you invoice.

[folkh]

The premise is that the monthly rent amount "includes" tax. Since you cannot charge tax on a tax. The monthly rent amount must be less than $1000 with the remainder being the tax. It is the same thing as saying the monthly rent is:
$934.58 plus sales tax of $65.42 (934.58 x .07)

Thanks Indy, didn't think of that!!

[jane032657]

You have to register with the Florida Dept of Revenue and the County that the property is in; and do two separate tax returns. You pay quarterly to the County and monthly to the State. And you need to tell the renter the tax they are paying.

[DARFAP]

Thanks for the responses. Yes, I have registered with the Florida Dept of Revenue. For Sumter Co I am using a total of 9% (6 for state tax, 1 for county discretionary, and 2 for county tourism development). So I am dividing my total charge by 1.09 to determine the amount of rent and go from there to figure the tax. Thanks again

[helen lovely]

Does Marion, Sumpter & Lady Lake Counties require you pay taxes on short term rentals?

[dalecrenshaw]

Does Marion, Sumpter & Lady Lake Counties require you pay taxes on short term rentals?

Yes, Lake, Sumter and Marion all require sale's tax on short term rentals.

[susanWhoSusan]

Why do we need to register with the state of FL? Do we pay all the 9% to the county, right? And we also need to pay federal tax because this is income.

[ducati1974]

You have to register with the Florida Dept of Revenue and the County that the property is in; and do two separate tax returns. You pay quarterly to the County and monthly to the State. And you need to tell the renter the tax they are paying.
I disagree with Jane, I believe when you file your monthly taxes with the FL Dept of Revenue that you are paying your County taxes then.

[jane032657]

I disagree with Jane, I believe when you file your monthly taxes with the FL Dept of Revenue that you are paying your County taxes then.

When you pay the State of Florida you also pay to the State of Florida the discretionary sales tax for the County which the property is located in. Discretionary sales tax is a special tax separate from the County Tax.

Separately you file to the County whatever their sales tax is.

My husband is a CPA. He knows the rules.

[ducati1974]

Sorry Jane, I still disagree with you. As "Darfap" said above the 9% tax includes 6% for the state, 2% for the county tourism, and 1% county discretionary. The one payment per month pays the state and county.

[peteg]

I submit a monthly return to Florida Dept of Revenue and pay them the tax of 9% - the return shows the 2% Sumter portion as a note on the back of the return (coupon) which I assume they pay to Sumter

Always advertise rental as including tax but show rent and tax separately on the rental agreement

[jane032657]

I submit a monthly return to Florida Dept of Revenue and pay them the tax of 9% - the return shows the 2% Sumter portion as a note on the back of the return (coupon) which I assume they pay to Sumter

Always advertise rental as including tax but show rent and tax separately on the rental agreement

Our rental is in Volusia County and they have their own tax form which we have to submit to them in addition to the State form, so maybe this is something specific then to that County. Maybe because Daytona Beach Shores has its own special tax. We are going to look at this; but this is how we have to do it every month, so we stand corrected for how you do it here. It is definitely different at the beach....

[OBXNana]

I submit a monthly return to Florida Dept of Revenue and pay them the tax of 9% - the return shows the 2% Sumter portion as a note on the back of the return (coupon) which I assume they pay to Sumter

Always advertise rental as including tax but show rent and tax separately on the rental agreement

We also do the monthly coupon route. We were told by the state of Florida it is easier for the owner of the property and also the county, if funds are paid directly to the state and they distribute the fund to individual county's. Less room for error as well.