Entrepreneur or Criminal ?
Entrepreneur or Criminal ?
If you intend to buy a home or already own one there is a high probability that its ownership is held under a corporation.
When operating a vacation rental property the best practice is to do it the “ Right Way”.
Why is this so Important … ?
- A Guest Is Injured or Property Damage.
At the TOP of the lists of risks you'll be taking is that guests will sue you because they’re injured or became sick while in your home. As an Host you can make every effort in regards to safety but you can guarantee that something won't happen. Even a frivolous lawsuit requires you defending yourself which can be pricey, time-consuming and stressful. The likelihood of you losing a lawsuit in such a situation will be drastically increased if your property has not been legally registered.
2. Your Breaking the “LAW”
The biggest error new hosts make is assuming that renting your extra space or home is legal because Airbnb allows you to build your listing. The chances are that code enforcement wont find out but as of recent they have been searching sites for unregistered rentals. Consider the biggest threat your neighbors seeing unfamiliar faces entering and exiting your home. Most neighbors will be more than happy to report you to the city if they disturbed by loud music or behavior they consider unacceptable. All it takes is one phone call to derail your rentals and have the city slap[ you with a fine.
Some cities and towns have banned or set codes that determine the zoning rules and specifications for renting short term. Not being present and renting your entire home can put you in violation in certain cities. By not following the city's code or Breaking the Law you can and will face thousands of dollars in fines and if not paid, the city will place a lien on your home.
3. Do you owe Taxes ?
Most cities charge occupancy taxes on short term rentals. Websites like Airbnb collect the taxes on your behalf but in some instances you'll need to collect the tax yourself.
Florida, for example, imposes a room occupancy tourist tax of 6% on rooms.
You also will have to register to pay federal and state income tax on the amount you earn from your Airbnb. You will not be allowed to pay the tax or legally collect it if your property has not been registered with the state, county and city as a short term rental lodging establishment.
To The Point !
Opening up your home on home sharing networks like Airbnb and Homeaway can be both profitable and risky. It's the utmost importance that you research and understand the pros and cons before starting. If you give it a go I advise putting the best foot forward to minimize risk.
It's very important that you know the zoning laws that govern your area, the consequences can be quite severe. Especially if you're not the homeowner and someone that's leasing from the owner. Lastly please read and properly comprehend your responsibility as a host and terms of the websites that carry your listing.
- Prior to activating your listing on Airbnb be sure to check your zoning laws for the specifics to adby by the law.
- Taxes are mandatory in most Florida jurisdictions in addition to income tax so make sure you have professional advice on how you will report your income.
- If you're planning to take short cuts and skip legalizing your Airbnb it's not worth it, the fines and liabilities are too much of a risk.
- Insurance is highly recommended to cover potential damage or lawsuits if a guest is injured while lodging in your home.
- Short-term rentals in some towns and cities are prohibited, and we highly advise you to check your local laws before advertising your home on any home sharing network.