Understanding Rentals – What type of rental is best for you and your property?

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Knowing the ins and outs of rentals is beneficial to you as a homeowner and will help you properly handle your investment property. Understanding the difference between long-term and short-term rentals can maximize your property’s use and accomplish your personal and financial goals for your home. 

Long-term rentals or ‘annual rentals’, are any rental that is 6 months and 1 day or longer, typically yearly (annual) rentals. Does require a non-transient “license” through the Monroe County Tax Collector’s office specifically called a Local Business tax which allows you as a homeowner to conduct business as a rental property. Long term rentals are not subject to state or county sales taxes. 

Annual rentals are perfect for homeowners who do not plan to utilize the property. Most of the time a long-term tenant will lease the property for one year and live there full time, with the intent of staying longer. Different from vacation rentals, the tenant is responsible for utilities, furnishing the home and must go through an application process. Annual rentals are geared towards homeowners looking to achieve a guaranteed income without the turnover of vacation rentals. 

Short-term rentals or ‘vacation rentals’ are rentals less than 6 months, typically weekly or monthly rentals. Weekly rentals (7 day minimum) and monthly rentals (28 day minimum) can be a bit confusing as they both fall into the category of a vacation rental. Short term rentals require a transient “license” through the Monroe County Tax Collector’s office specifically called a Local Business tax. The County considers monthly rentals a minimum of 28 days and any rental period less than that would fall under additional licensing requirements. Not to mention that various municipalities, like the Village of Islamorada, require different licenses and have different regulations for short term rentals. That is a whole other subject that is explained further in our Vacation Rental Licensing blog. 

Short term rentals are ideal for homeowners who want to make additional income to offset their ownership, but also want to benefit from the use of their vacation home throughout the year. Vacation rentals differ quite a bit from annual rentals, with the process being they are marketed and booked online, come fully furnished down to silverware and linens, and require full time guest management. Another main difference between short-term and long-term rentals is that short term rentals are subject to both Florida State (7½%) sales tax and Monroe County discretionary (5%) sales tax for a total of 12½% being collected of which is incurred by the renter. 

Deciding what type of rental is best for your property and your investment can be a tough choice to make, we would be happy to dive into it further with you and get you hooked up the right way so give us a shout! (all puns intended)