Are mandatory Florida HOA assessments used to maintain association-owned recreational facilities taxable as admissions?

Plain-English summary

The Florida Department of Revenue ruled that a homeowners' association's mandatory annual assessments were not taxable admissions when they were required as a condition of owning a home and paid to maintain association-owned common areas, including golf, tennis, and fitness facilities.

The result depended on the association being licensed by the Department of Business and Professional Regulation as a homeowners' association when it merged with the recreational club. The facilities also had to become common areas owned by the association and be available for members' use.

Optional amounts were different. Extra assessments paid by members who chose upgraded membership levels were taxable, as were charges paid by members or guests to use golf, tennis, and other facilities. Dues paid by nonresident members were also taxable because they were not required as a condition of owning property in the community.

What this means for you

Homeowners' associations

The exemption turns on structure, not merely how a charge is labeled. The association's status, ownership of the facilities, mandatory nature of the assessment, and link to property ownership all need to line up with Rule 12A-1.005(4)(d)3.

Community-club operators

Separating base mandatory assessments from optional golf or other recreation upgrades is important. The ruling treated the optional increment as a taxable admission even though the base assessment was exempt.

Accountants and tax professionals

Verify association licensing and governing documents, identify which facilities are common areas, and trace each charge to mandatory ownership obligations or optional access. Nonresident memberships require separate analysis because they lack the ownership condition.

Common questions

Q: Are all HOA assessments exempt from Florida sales tax?
A: No. This ruling requires the association and payment to satisfy the specific criteria in Rule 12A-1.005(4)(d)3.

Q: Were base assessments for common recreational facilities taxable?
A: No, because they were mandatory as a condition of homeownership and supported association-owned common areas.

Q: Were upgraded golf membership amounts taxable?
A: Yes. The extra amounts reflected an optional membership choice rather than a mandatory ownership charge.

Q: What about one-time facility-use charges?
A: Charges paid by members or guests to use golf, tennis, or other facilities were taxable admissions.

Q: Were nonresident memberships exempt?
A: No. Their payments were not required as a condition of owning a unit governed by the association.

Citations and references

• Fla. Stat. §§ 212.02(1), 212.04, 720.103(2), and 720.301(9)
• Fla. Stat. § 213.22
• Fla. Admin. Code r. 12A-1.005(4), including (4)(d)3.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 19A-012

Original ruling text

TAX: Sales and Use Tax
TAA NUMBER: 19A-012
ISSUE: Admissions
STATUTE CITE(S): Section(s) 212.02(1) and 212.04, F.S.
RULE CITE(S): Rule 12A-1.005(4)(d)3., F.A.C.
QUESTION: Are certain mandatory assessment payments made by members of a homeowners’
association to the homeowners’ association subject to the sales tax on admissions when the
payments are made as a condition to ownership of real property governed by the association,
and the club facilities are common areas owned by the association?
ANSWER: No, so long as the criteria provided by Rule 12A-1.005(4)(d)3., F.A.C., are satisfied.
Mandatory assessments paid by homeowners’ association members to the homeowners’
association that are required to be paid as a condition to ownership or occupancy of real
property, and are paid for maintenance of club facilities, are part of the common areas owned
by the association, and are for the use of all members are not subject to the sales tax imposed
by s. 212.04, F.S. The optional payments made by the members regarding use of facilities are
subject to sales tax.
May 2, 2019

XXXXXXX
XXXXXXX
XXXXXXX
Subject: Technical Assistance Advisement (“TAA”)
TAA 19A-012
AMS#: 70000170605
Sales and Use Tax-Admissions
Sections 212.02 and 212.04, Florida Statutes (“F.S.”)
Rule 12A-1.005(4), Florida Administrative Code (“F.A.C.”)
XXXXXXX (“Petitioner”)(“Club”)

XXXXX
May 2, 2019
Florida Department of Revenue
Page #2

Business Partner Number: XXXXXX
FEIN: XX-XXXXXXX
XXXXXXXX (“Association:)
Business Partner Number: XXXXXX
FEIN: XX-XXXXXXX
XXXXXXXX (“Community”)
Dear XXXXX:
This letter is a response to your petition dated February 27, 2019, for the Department’s
issuance of a Technical Assistance Advisement (“TAA”) to Petitioner, regarding Association’s
assessments. Your petition has been carefully examined, and the Department finds it to be in
compliance with the requisite criteria set forth in Rule Chapter 12-11, F.A.C. This response to
your request constitutes a TAA and is issued to you under the authority of section 213.22, F.S.

Facts
Club and Association conduct operations in Community in XXXXXX County. Club is a memberowned corporation that currently owns, operate, and maintains certain recreational facilities,
including but not limited to golf, tennis, and fitness facilities. Club has XXXX members, of which
X members are not members of Association. Club has XXXX members who own residential
properties in Community. Association is a Florida not-for-profit corporation governed by
Chapter 617, Florida Statutes (“F.S.”). Association is a master association governed by Chapter
720, Florida Statutes (“F.S.”), regarding property and homeowners’ associations.
Club and Association will merge on XXXXXXX XXX. Association will be the surviving entity, and
all of Club’s currently owned property, including recreational property, such as the golf, tennis,
and fitness facilities, will be common areas owned by Association. After the merger,
Association will consist of only equity owners. After the merger, Association may also offer
non-resident equity memberships; however, all other Association members are Community
residential owners.
Association will have three primary types of Association memberships (XXXXX, XXXXX, and
XXXXX). These membership types will provide the members rights to use all common areas,
including the recreational facilities. XXXXXX and XXXXX members will have additional rights to
use the golf facilities. XXXXX and XXXXX members will be required to pay an additional annual
assessment amount in addition to the assessment amount paid by XXXXX members. After the
merger, all Association members will be required to be at least a XXXXX member in Association.

XXXXX
May 2, 2019
Florida Department of Revenue
Page #3

Association will have a few Grandfathered members. The Grandfathered members are
currently Club social members who are also Community unit owners. The current Club
membership provides only limited use rights with all Club recreational facilities. After the
merger, Grandfathered members will have only limited use rights in the recreational facilities
obtained by Association from Club. These rights will not exceed that of XXXXX members.
When the Grandfathered members sell their residential property, the new owner will be
required to obtain a XXXXX membership, XXXXX membership, or XXXXX membership.
After the merger, Association will require Association members to pay annual assessments to
fund all costs incurred by Association in connection with the common areas, and residential
facilities obtained by Association. Each member will be required to pay for their assessment
based on a proration of the overall cost associated with the residential membership level.
Additional assessments may be made to XXXXX, XXXXX, and XXXXX members for the
maintenance and operation of recreational facilities, and for capital improvements.
Taxpayer would like guidance regarding the taxation of the initiation fees, capital contributions,
and annual and other assessments to XXXXX, XXXXX, and XXXXX members.

Law and Discussion
Section 212.04, F.S., provides that sales tax must be collected by an admission provider on the
sales price or amount received from the sale of admissions. Section 212.02(1), F.S., provides
that dues and fees payments to a private club or membership club are admissions. Rule 12A1.005(4)(d)3., F.A.C., provides the following:
Fees paid to private clubs or membership clubs that do not entitle the payor to
the use of the club’s recreational or physical fitness facilities are not subject to
tax. Examples of such fees are:

3. Mandatory dues and fees paid to a condominium association, homeowners’
   association, or cooperative association when they are required to be paid as a
   condition of ownership or occupancy of real property and the club facilities are
   part of the common elements or common areas of the real property.
   As required by the Rule, the payments by members must be made to a condominium
   association, homeowners’ association, or a cooperative association. These types of
   associations are defined by ss. 718.103(2), 719.103(2), and 720.103(2), F.S. The association that
   receives the assessment payment must be licensed by DBPR as the association type claimed
   when the association is seeking the Rule exemption. The petition provides that Association is
   governed by s. 720.301(9), F.S., which provides, in part, the following:

XXXXX
May 2, 2019
Florida Department of Revenue
Page #4

(9) “Homeowners’ association” or “association” means a Florida corporation
responsible for the operation of a community or a mobile home subdivision in
which the voting membership is made up of parcel owners or their agents, or a
combination thereof, and in which membership is a mandatory condition of
parcel ownership, and which is authorized to impose assessments that, if unpaid,
may become a lien on the parcel….
After the merger is consummated, if Association is licensed by the Department of Business and
Professional Regulation (“DBPR”) as a homeowners’ association, then Association will qualify as
a homeowners’ association pursuant to Rule 12A-1.005(4)(d)3., F.A.C. As provided by Rule 12A1.005(4)(d)3., F.A.C., mandatory dues and fees paid by members to Association will not be
subject to sales tax so long as the payments are made as a condition of ownership of the
residential property, and the club facilities are Association common areas of the residential
property owned by the member. The exemption provided by the Rule does not apply to
optional amounts paid, such as the additional amounts paid by an XXXXX or XXXXX member
compared to the amount paid by a XXXXX member. The assessment, dues, or fees paid by a
member who is not a resident of Community are taxable admissions because the payments are
not made as a condition of ownership in a unit governed by Association.
Response
If Association is licensed by DBPR as a homeowners’ association at the time of the merger, then
Association qualifies as a homeowners’ association as required by Rule 12A-1.005(4)(d)3., F.A.C
Then, the annual assessments paid by all XXXXX members satisfy the criteria established by
Rule 12A-1.005(4)(d)3., F.A.C., because the payments by the members will be mandatory, and
as a condition of homeownership use of common areas including facilities previously owned by
Club. The annual assessment amounts paid by XXXXX and XXXXX members in excess of the
annual assessment amount paid by XXXXX members are optional, and therefore subject to sales
tax. This is because the criteria that the payment of the assessment must be mandatory is not
satisfied because the members made the option of upgrading the membership. The amounts
paid by members or guests to use the golf, tennis, and other facilities, are subject to sales tax.
They are not mandatory charges based on ownership in property in Community.
Rules 12A-1.005(4)(a)1.a., and (4)(a)2.d., F.A.C., provide that initiation dues, capital
contributions, and capital assessments paid by equity members will not be subject to sales tax.
The request did not provide any information regarding particular capital assessments and
capital contribution. The sales tax will not apply only if the criteria of 12A-1.005(4), F.A.C., are
satisfied.
This response constitutes a Technical Assistance Advisement under section 213.22, F.S., which
is binding on the Department only under the facts and circumstances described in the request

XXXXX
May 2, 2019
Florida Department of Revenue
Page #5

for this advice, as specified in section 213.22, F.S. Our response is predicated on those facts
and the specific situation summarized above. You are advised that subsequent statutory or
administrative rule changes, or judicial interpretations of the statutes or rules, upon which this
advice is based, may subject similar future transactions to a different treatment than
expressed in this response.
You are further advised that this response, your request and related backup documents are
public records under Chapter 119, F.S., and are subject to disclosure to the public under the
conditions of section 213.22, F.S. Confidential information must be deleted before public
disclosure. In an effort to protect confidentiality, we request you provide the undersigned with
an edited copy of your request for Technical Assistance Advisement, the backup material and
this response, deleting names, addresses and any other details which might lead to
identification of the taxpayer.
Your response should be received by the Department within 10 days of the date of this letter.
Respectfully,
Chuck Wallace
Chuck Wallace
Technical Assistance & Dispute Resolution
(850) 717-7541
AMS #: 7000170605