Florida rental property taxes work differently from almost every other state, and the difference costs uninformed landlords real money. Florida charges no personal income tax, so your rental profit is never taxed at the state level. Every dollar of federal deduction you claim stays in your pocket instead of being partly clawed back by a state return. That advantage is genuine. It is also the reason many Florida landlords assume their obligations end with a federal Schedule E, which is where the penalties start.
A Florida rental property can trigger four separate taxes, collected by three different agencies, on three different schedules. Federal income tax goes to the IRS in April. Sales tax and tourist development tax on short-term stays are due monthly, split between the Florida Department of Revenue and your county tax collector. County property tax arrives in November. Tangible personal property tax has an April 1 deadline that most furnished-rental owners have never heard of. Missing any one of them produces interest and penalties that have nothing to do with how profitable the property was.
The Four Taxes on a Florida Rental
| Tax | Who collects it | Applies to | Rate | Deadline |
|---|---|---|---|---|
| Federal income tax | IRS | Net rental profit | Your ordinary rate | April 15 |
| Sales tax on transient rentals | FL Dept. of Revenue | Stays of 6 months or less | 6% state plus county surtax | Monthly, by the 20th |
| Tourist development tax | County tax collector | Stays of 6 months or less | 6% in Palm Beach County | Monthly, by the 20th |
| County property tax | County tax collector | Assessed property value | Set by local millage | November, due March 31 |
Long-term leases of more than six months escape the two monthly taxes entirely. If your tenant signs a twelve-month lease, you owe federal income tax and county property tax, and nothing else. This is the single largest structural difference between a long-term rental and a vacation rental in Florida, and it should inform how you position the property before you buy it.
Federal Income Tax and Schedule E
Rental income is reported on Schedule E, attached to your Form 1040. You report gross rent received, subtract every ordinary and necessary expense of operating the property, and pay tax on what remains at your ordinary income rate.
Rental income is generally not subject to self-employment tax, a 15.3% saving compared with active business income. The exception is providing substantial services to guests, such as daily cleaning or meals, which can push a short-term rental into business territory.
Deductible expenses on a Florida rental include:
- Mortgage interest, reported on your lender’s Form 1098
- County property taxes paid
- Property insurance, including windstorm and flood coverage
- Repairs and maintenance
- Property management fees
- HOA and condo association dues
- Advertising and tenant screening
- Legal and professional fees
- Travel and mileage to the property
- Depreciation
Depreciation Is the Deduction Most Owners Underclaim
Residential rental property depreciates over 27.5 years. Land never depreciates, so you must separate the two before you calculate anything.
On a $400,000 purchase where the county attributes $120,000 to land, your depreciable basis is $280,000. Divided by 27.5, that produces roughly $10,182 in annual depreciation. For an owner in the 24% bracket, that line item is worth about $2,443 a year and requires no cash outlay.
Depreciation is not optional. The IRS calculates your gain on sale as if you claimed it whether you did or not. An owner who skips depreciation for eight years pays recapture tax on deductions they never received.
Short-Term Rentals: Where Palm Beach County Owners Get Caught
Any stay of six months or less is a transient rental. Two taxes apply on top of each other.
The state charges a 6% transient rentals tax, plus the county discretionary surtax. Palm Beach County’s combined sales tax rate is 6.5% as of January 1, 2026, down from 7%, after voters approved a 0.5% school capital outlay surtax that replaced the expiring 1% infrastructure surtax. Palm Beach County then adds a 6% tourist development tax, often called the bed tax, remitted separately to the Constitutional Tax Collector. Total tax on a short-term booking runs roughly 12.5%.
Here is the part that generates audit letters. Airbnb collects and remits Florida’s 6% state transient rentals tax and the county surtax on your bookings. Airbnb does not collect Palm Beach County’s tourist development tax, because it has no direct agreement with the county. VRBO collects nothing at all. Owners see a taxes-collected line on their Airbnb payout report, reasonably assume everything is handled, and never register a TDT account. The 6% county tax accrues silently, and the county assesses interest and penalties when it catches up.
The tourist development tax applies to mandatory fees as well, including cleaning fees and pet fees, not just the nightly rate. Returns are due on the first of the month and are late after the 20th.
County Property Tax and the 10% Cap
County property tax bills are mailed in November and are due by March 31. Florida offers early payment discounts of 4% in November, 3% in December, 2% in January, and 1% in February. Paying in November on a $6,000 bill saves $240 for doing nothing but writing the check early.
Two exemptions that protect Florida homeowners do not protect landlords. The homestead exemption applies only to a primary residence, and the Save Our Homes 3% assessment cap goes with it. Convert a home you lived in to a rental and you lose both, and the property is reassessed at just value the following January 1. Owners converting a long-held homesteaded property are frequently shocked by the first bill.
Rental property gets weaker protection. Florida caps annual assessment increases on non-homestead property at 10%. The cap resets when ownership changes, so a newly purchased rental is reassessed at market value before the cap begins to apply.
The Tangible Personal Property Tax Nobody Mentions
If you rent a furnished property, the furniture, appliances, and equipment are tangible personal property, and they are taxable. You file Form DR-405 with the county property appraiser by April 1.
The first $25,000 of assessed value is exempt, which covers many single-unit furnished rentals. The exemption is not automatic. You have to file an initial return to claim it. Owners who never file can face penalties and lose the exemption entirely.
What Changed: Commercial Rent Tax Repealed
Florida repealed its sales tax on commercial rent effective October 1, 2025, under House Bill 7031. Florida was the only state that taxed business rent, and it is now gone for office, retail, warehouse, and self-storage leases. Short-term residential rentals, parking spaces, and boat slips remain taxable. Rent covering occupancy through September 2025 still owes the old tax, even if the tenant paid late.
When Your Rental Loss Gets Blocked
Rental activity is passive by default, and passive losses can only offset passive income. A special allowance lets owners who actively participate deduct up to $25,000 of rental loss against ordinary income. That allowance phases out between $100,000 and $150,000 of modified adjusted gross income and disappears completely above $150,000. Blocked losses are not lost. They carry forward and release when you sell the property.
Short-term rentals with an average guest stay of seven days or fewer are not treated as rental activities under the passive loss rules. With material participation, those losses can offset W-2 income without real estate professional status. This is one of the few remaining strategies that meaningfully reduces high earners’ tax bills, and it is also heavily scrutinized, so contemporaneous time records matter.
What You Owe When You Sell
Long-term capital gains on appreciation are taxed at 0%, 15%, or 20% depending on income. Depreciation recapture is taxed separately at up to 25%. Higher earners add the 3.8% net investment income tax above $200,000 for single filers and $250,000 for joint filers. A 1031 exchange defers all of it if you reinvest into like-kind property within the required 45-day and 180-day windows.
Getting It Right the First Time
Tax USA has handled rental property returns for Palm Beach County landlords since long before short-term platforms complicated the picture. Our team of certified tax experts, IRS enrolled agents, and CPAs prepares Schedule E returns, sets up depreciation schedules correctly from year one, registers short-term rental owners for sales tax and tourist development tax accounts, files DR-405 tangible personal property returns, and structures 1031 exchanges. We also represent owners who are already behind, whether that means unfiled TDT returns or an IRS notice about disallowed rental losses. Bookkeeping, payroll, and tax resolution run under the same roof, which matters when a rental portfolio grows into a business. Call (866) 529-5558 or visit our West Palm Beach office at 1892 Abbey Rd Ste J for a free consultation.
Frequently Asked Questions
Do I pay Florida state income tax on rental income?
No. Florida has no personal income tax. Rental profit is taxed only at the federal level on Schedule E.
Do I owe sales tax on a long-term rental in Florida?
No. Leases longer than six months are exempt from both the transient rentals tax and the tourist development tax.
Does Airbnb pay my Palm Beach County tourist development tax?
No. Airbnb remits the state sales tax and county surtax but not the 6% Palm Beach County TDT. You must register with the county tax collector and remit it monthly yourself.
Can I keep my homestead exemption if I rent out my house?
No. The homestead exemption and the Save Our Homes cap apply only to a primary residence. Renting the property out ends both.
How much depreciation can I claim on a Florida rental?
Divide the building value, excluding land, by 27.5. A $280,000 depreciable basis yields about $10,182 per year.