Property Taxes: These may be levied by the city and/or the county where your home is located. In the USA, property taxes belong to the owner of the property, they are not passed onto the tenants and there is no resident’s tax, the residents don’t receive a bill from the local government for living there. So, when you own a rental home in Florida you will be paying property taxes.
The property tax assessment is based solely on the perceived fair market value that the county believes the property is worth. The taxes are levied to pay for public services such as emergency services, libraries, schools and local government etc. There is no discount for seasonal residents. You cannot say that you don’t use the services and will not pay. Neither can you make your tenants responsible for payment. As the homeowner you are fully accountable for payment. If you don’t pay your taxes, they will foreclose on your home and sell it to pay off your property tax debt. Even if you didn’t receive a tax bill, the laws states that you are still liable.
Some mortgage companies include these taxes in your monthly payments, others don’t. Call your local county office and ask for the tax collector’s office to ensure you are up to date with your payments. I know that a lot of the mailing addresses especially for the foreign owners have been entered incorrectly into public records. So, please check with your local County and city to ensure they have your correct mailing address. If you’re not sure who to contact, start by Googling your address and ask what county your home is located in.
Property tax bills are usually mailed out yearly around October and are due and payable by November 30. Payments after that date incur late fees and interest. You have up until the end of March to pay them. Then the county sells them at auction to the highest bidder with interest rates as high as 20%.
After three years of non-payment. Your home will be sold on the county steps to pay its debts. The sellers or the buyers aren’t interested in what your home is worth. It will be sold to clear the debt and that’s all. This is how people are able to buy $200,000 homes for $15,000 cash in outstanding taxes. Be very aware that this issue is more wide spread than you might imagine. Especially when you don’t have a mortgage. Most counties have a website that you can check.
If your mortgage company pays your property tax bill, they do so out of your escrowed funds and it will be noted in the bottom section of the bill. If you have no mortgage and haven’t received a property tax bill, get on it straight away. You could be in serious danger of losing your home. If you are making mortgage payments, in most cases the bank will bring unpaid taxes to your attention!
Sales and resort taxes: In the state of Florida There are no rental taxes due on any rental income you receive when the same tenants live in your home longer than 27 weeks. If your home is licensed as a vacation rental and you’re moving over to long-term rentals you will need to inform your local tax collector to cancel your licenses. Some areas require you to have a different occupational license. This will need to be changed from a short-term rental license to a long-term license. The local government may require you to provide them with proof of this change, such as a signed lease.
Sales and Resort ( Bed) Taxes: These vary from County to County. There is state sales tax and county resort tax due on each and every rental you place in a vacation home. Contact the State of Florida for further details. Here’s a link to an article that should help. http://dor.myflorida.com/Forms_library/current/gt800034.pdf
Federal Tax Returns
If you are a foreign investor/homeowner you are required to obtain a Tax Identification number often referred to a TIN. The tax year in the USA runs January through December. Your management company should provide you with a 1042s form which you’ll need to give to your accountant to submit your tax return. Some send out 1099’s. but the 1099’s are for the US residents so if they give you one. Ask them for the right form. The deadline for your yearly submission is May each year. It’s highly recommended that you comply. here’s a link to their website for further information. https://www.irs.gov/individuals/international-taxpayers/foreign-persons-receiving-rental-income-from-u-s-real-property
You will be able to deduct all your running costs, HOA fees, management fees, mortgage interest and repair costs. You also are able to claim a portion of your travel expenses so you can inspect your home yearly. Rental homes are currently considered as a depreciable asset. Even though you may have a positive income figure, under current US laws, you still should have a negative taxable income. Please talk to your accountant for further details.
If you don’t submit your yearly Federal tax return, then by law, your management company is supposed to withhold 30% of your gross rental income and send it to the IRS. You’ll get it back, but it takes a while. Best to get your tax I.D number as soon as possible. If you’re not sure how, your accountant USA can help you. If you don’t have one, ask us or your current management company for a recommendation.
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