Real estate disputes: Florida tax issues can be complex

| Apr 5, 2020 | Real Estate Disputes |

A Palm Beach County tax collector went toe to toe in court against Airbnb, Tripadvisor and HomeAway, and lost. The ruling was appealed and a majority decision in the 4th District Court of Appeal upheld the lower court’s ruling. The issue at hand was whether businesses such as those named in the case should have to pay “bed taxes” similar to hotels. Florida real estate disputes involving tax issues are often complicated, which is why it pays to seek guidance ahead of time from someone well-versed in such laws.

In this case, the tax collector wanted the court to order Airbnb, Tripadvisor and HomeAway to pay “bed taxes” since they collect money from renters and give it to property owners. However, the court determined that such businesses are merely “middle men” or “conduits” between renters and property owners. While the tax collector argued that the businesses are dealers according to state law, the judges found otherwise, with the appellate panel ruling that dealers must have possessory interest in a property for the tax to apply.

Because businesses such as Airbnb do not have possessory interest, but merely act as an online connection between renters and property owners, the court ruled that such businesses should not incur the same taxes that hotels pay. One judge on the panel dissented. He wrote that since online platforms receive rental payments, they should also be responsible for collecting and remitting appropriate taxes. He further asserted that the companies are acting as agents for property owners by receiving payments from renters.

Florida real estate disputes can arise for many reasons, such as taxes as in this particular case, as well as because of disagreements regarding rental contracts, security deposits and other issues. In the case mentioned here a municipal government filed a claim against companies that run online business platforms. An experienced real estate law attorney is a great asset to have on hand when trying to resolve any real estate-related legal issue.

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