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Example of How Sales and Lodging Taxes Work

The following is an example of how the basic sales and lodging tax calculations are applied and how the tax payments are remitted.  In this case the example is for Destin, Florida (Okaloosa County).

In this example we assume a transaction where the home is rented seven nights for $250 per night, plus a $100 cleaning fee. Sales tax calculations are relatively simple, the total rent received is multiplied by the tax rate.  The table below demonstrates how the tax is calculated and charged to the guest.
 

Line Item

Amount

Comment

Rent

$1,750.00

Seven nights x $250

Cleaning Fee

$100.00

Clean fees and other mandatory charges are taxable

Total (taxable amount)

$1,850.00

Total taxable revenue collected from the renter.  There are no deductions.

Tax Rate

11.0%

6.0% Florida Sales plus 5.0% Okaloosa County Tourist Development tax

Tax

$203.50

Total revenue of $1,850.00 x the 11.0% tax rate

Total Collected

$2,053.50

Total funds collected from the guest, of which $1,850 is rent and $203.50 tax


Now that the tax has been collected from your guest, the following table summarizes the calculations for each tax return and payment, one return for Florida and one return for Okaloosa County. In the following example we will assume the previous rental was the only booking for the month.

Line Item

Florida

Okaloosa

County

Comment

Revenue

$1,850.00

$1,850.00

Total taxable revenue

Tax rate

6.0%

5.0%

 

Tax due

$111.00

$92.50

Revenue x the tax rate

Less collection allowance

($2.78)

($2.31)

Florida and Florida counties allow the taxpayer to keep 2.5% of the tax due as compensation for collecting and remitting the tax, as long as the return is filed on time

Net tax Due

$108.22

$90.19

This is the amount you pay.  Separate tax returns and checks need to be remitted to Florida and Okaloosa county.















The completed tax return form and payment needs to be postmarked by the 20th of the month following the month of the tax period, otherwise penalties and interest will apply. For example, taxes on revenue for the July rental period need to be postmarked by August 20th.

Important Note
This example was for a vacation rental in Destin, FL. It is important to note that tax rates, due dates, collection allowances (if any) and filing frequency for returns vary by city, county and state across the U.S. The method of calculating the tax on a rental and calculations for completing a tax return are generally universal for all jurisdictions. A high percentage of locations require monthly filing but there is also a high percentage that require quarterly filing. Taxes due on the 20th is the most common date, but a large percentage of returns are also due on the 15th, 25th and 30th (or last day of the month).