Were mandatory homeowners' association assessments for maintaining common recreational facilities taxable admissions?

Plain-English summary

Florida found that a mandatory homeowners' association assessment used to maintain association-owned common recreational facilities was not a taxable admission.

Every owner had to belong to the association and pay the assessment as a condition of property ownership. The facilities were common areas, and the association used the pro rata assessment to cover their maintenance expenses.

The ruling did not protect optional charges, fees for restricted or limited common property, or payments by nonresidents, because those amounts were not mandatory conditions of owning the community property.

What this means for you

Homeowners' associations

Tie the assessment to ownership obligations and common-area maintenance, and collect it directly through the association.

Community managers

Separate optional recreation charges and nonresident access fees from mandatory owner assessments.

Common questions

Was the mandatory assessment taxable? No, when all rule conditions were satisfied.

Were optional recreation fees exempt? No.

Were nonresident access payments exempt? No.

Citations and references

• Fla. Stat. Sec. 212.02(1)
• Fla. Stat. Sec. 212.04
• Fla. Admin. Code R. 12A-1.005(4)(d)3.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 19A-022

Original ruling text

November 14, 2019

XXXXXXX
XXXXXXX
XXXXXXX
Subject: Technical Assistance Advisement (“TAA”)
TAA 19A- 022
AMS#: XXXXXXXXXXX
Sales and Use Tax-Admissions
Sections 212.02(1) and 212.04, Florida Statutes (“F.S.”)
Rule 12A-1.005(4), Florida Administrative Code (“F.A.C.”)
XXXXXXXXX (“Petitioner”) (“Association”)
Business Partner Number: XXXX
FEIN: XX-XXXXXXX
XXXXXXXXXXXXXXX (“Community”)
Dear XXXXXXX:
This letter is a response to your petition dated September 24, 2019 for the Department’s
issuance of a Technical Assistance Advisement (“TAA”) to Petitioner regarding payments by
homeowner’s association members to the homeowner’s association. 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.
Issue
Whether certain payments made by homeowner’s association members to a homeowner’s
association are subject to the sales tax on admissions?
Facts
Association is organized and licensed as a homeowner’s association. Residents in Community
are required to be members of Association. Members are billed assessments for the use of

XXXXX
November 14, 2019
Florida Department of Revenue
Page 2

Association property. Association has one class of membership. Association purchased
recreational facilities including XXXXXXXXX. The area purchases are collectively referred to a
“Recreational Facilities.”
The Recreational Facilities are Association owned common areas for the use of Association
members. The governing documents characterize the Association members right to use
Association common property as an easement. The Association members will be billed an
assessment (“Recreational Facility Assessment”) on a pro rata basis for all Association expenses
to maintain the common areas owned by Association. The Association members are required
to pay the Recreational Facility Assessment pursuant to the governing documents. Association
will place a lien on Association member’s residence within Community for failure to pay the
assessment.
Applicable Law and Analysis
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., defines the
term “admissions” to includes dues and fees payments to a private club or membership club
that provides recreational facilities are admissions. Rule 12A-1.005(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. Here, Association is
   licensed by the Florida Department of Business and Professional Regulation (“DBPR”) as a
   homeowner association.
   As provided by Rule 12A-1.005(4)(d)3., F.A.C., mandatory assessments paid by Association
   members to Association as to the areas identified as Recreational Facilities will not be subject
   to sales tax so long as the payments are made directly to Association to cover expenses
   incurred by Association to maintain Association common areas, the payments are made as a
   condition of ownership of the residential property in Community, and the Recreational Facilities
   are Association common areas.

XXXXX
November 14, 2019
Florida Department of Revenue
Page 3

Response
The Recreational Facility Assessment will not be subject to sales tax so long as the criteria
provided for by Rule 12A-1.005(4)(d)3., F.A.C., are satisfied.
The exemption provided by the Rule does not apply to optional amounts paid, such as amounts
paid to use Recreational Facilities in addition to the assessment amount paid by each member.
The exemption also does not apply to amounts paid to use limited common property that has
restricted use. The exemption does not apply to amounts paid by non-residents to use
Recreational Facilities because the payments are not made as a condition of ownership.
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
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 #: XXXXXXXXXX