Did a tenant's early departure make a good-faith written lease longer than six months taxable under Florida's transient-rental rules?

Subject

Bona Fide Written Leases

Plain-English summary

A good-faith signed lease granting the tenant the right to occupy living accommodations for longer than six months qualified for the exemption even if the tenant later left early. The Department did not treat actual occupancy for the full term as a separate requirement when the written lease was bona fide when executed.

Early departure or default did not retroactively make the lease payments taxable. Absent an affidavit or sworn statement showing that the landlord or tenant never intended continuous occupancy for the stated term, the Department presumed the agreement was made in good faith.

What this means for you

The ruling focused on the parties' intent and the signed agreement at the start of the tenancy, not hindsight based solely on how long the tenant ultimately stayed.

Common questions

Q: Must the tenant actually remain longer than six months? No, not when a bona fide longer-term written lease existed.

Q: What could defeat the exemption? Evidence that the parties did not genuinely intend continuous occupancy for the lease term.

Q: Did the state exemption also affect convention development tax? Yes. Accommodations exempt under section 212.03 were likewise exempt under the cited convention-tax provision.

Citations and references

• Fla. Stat. § 212.03(1), (4) — living-accommodation tax and longer-than-six-month exemption
• Fla. Stat. § 212.0305(3)(a) — convention development tax
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-035

Original ruling text

Jun 15, 1993

RE: TAA 93A-035
Rentals of Living Accommodations; Bona Fide Written Leases
Sections 212.03(1),(4); 212.0305(3)(a), F.S.

Dear :

This is in response to your letter dated April 14, 1993, in
which the XXX (hereinafter "County") requests a Technical
Assistance Advisement (TAA) on the position of the Department of
Revenue on the meaning of "bona fide written lease" as that term
is used under s. 212.03(4), F.S. Your request relates to an
audit performed by "County" on XXX (hereinafter "Taxpayer") and
is stated, in part, as follows:

"... 2. County' has imposed a sub county convention development tax pursuant to Florida Statute 212.0305(4)(e) implemented byCounty' Ordinance No. 84-11, as amended.
"3. County' auditor conducted an audit at...Taxpayer's'
hotel for the period covering April 1, 1990 to March 31,
1991. The Taxpayer' claimed exemptions from the tax for rentals in excess of six months. "4. As stated by Ms. Sharon Gallops in State of Florida, Department of Revenue letter dated November 25, 1992...Your inquiry has arisen from a situation in which an
auditor for the County' recommended that theTaxpayer' be
assessed for convention and tourist development taxes.
[T]he auditor based his recommendation on the fact that
although certain tenants of the Taxpayer' had entered into seven month written leases, a greater percentage of those tenants left theTaxpayer's' [hotel] before the end of
their lease term. The auditor came to the conclusion that
none of the leases were bona fide unless the tenant who had
entered into the lease agreement actually stayed at the
hotel for more than six months...'
"5. `County's' position is that unless tenant fulfills the
written lease requirements of more than a six months
tenancy, the exemption is inapplicable as the lease is not

bona fide' as required by F.S. 212.03(4).... "6. TheTaxpayer' has taken the position that by changing
the hotel to an apartment building it is no longer required
to pay the tax....
"7. The Taxpayer's' CPA provided a memorandum of law which concludes that a tenant's actual stay is not required to make the written lease bona fide nor was it the intent of the legislature to impose this tax on aprincipal' place
of residence as provided by Florida Statute
212.03(7)(c)....
"8. Your advice is requested as to whether or not the
actual occupancy of the property for more than six months
is the test for a `bona fide' lease exemption from the
convention development tax per Florida Statute
212.03(4)...."
STATUTORY AUTHORITY

Section 212.03, F.S., provides in part:

"(1) It is hereby declared to be the legislative intent
that every person is exercising a taxable privilege who
engages in the business of renting, leasing, or letting any
living quarters or sleeping or housekeeping accommodations
in, from, or a part of, or in connection with any hotel,
apartment house, roominghouse, or tourist or trailer camp.
For the exercise of such privilege, a tax is hereby levied
in an amount equal to 6 percent of and on the total rental
charged for such living quarters or sleeping or
housekeeping accommodations by the person charging or
collecting the rental....
"(4) The tax levied by this section shall not apply to, be
imposed upon, or collected from any person who shall have
entered into a bona fide written lease for longer than 6
months in duration for continuous residence at any one
hotel, apartment house, roominghouse, tourist or trailer
camp, or condominium, or to any person who shall reside
continuously longer than 6 months at any one hotel,
apartment house, roominghouse, tourist or trailer camp, or
condominium and shall have paid the tax levied by this
section for 6 months of residence..."

Section 212.0305, F.S., under which the convention development
taxes are authorized provides in part:

"(3)(a) ... Any payment made by a person to rent, lease, or
use any living quarters or accommodations which are exempt
from the tax imposed under s. 212.03 shall likewise be
exempt from any tax imposed under this section."

OPINION

The term "bona fide written lease" is not defined in the
Florida Statutes; therefore, we must look to its common and
ordinary meaning. Black's Law Dictionary, sixth edition,
provides the following definitions:

"Bona fide. In or with good faith; honestly, openly, and
sincerely; without deceit or fraud..."

"Lease. Any agreement which gives rise to relationship of
landlord and tenant... Contract wherein one lets to the
other a certain space, property or building for specified
unit of time..."

It is the position of the Department that when the lessee
and the landlord have in good faith executed a signed, written
agreement that provides for the tenant's right to occupy the
living accommodations for a period longer than six months, such
agreement is considered a "bona fide written lease for longer
than 6 months in duration" for purposes of the exemption granted
under s. 212.03(4), F.S.

It is further the position of the Department that tax does
not apply to any lease payments when a tenant, who signs a
written lease or agreement for occupancy of living
accommodations for longer than six months, does not occupy the
property for the full term of the lease since s. 212.03(4),
F.S., goes no further than to provide the exemption and does not
provide that rent amounts are subject to tax if there is a
default by a party to the lease. Absent an affidavit or sworn
statement by the lessee or lessor that it was not the intention
at the time the lease agreement was entered into to continuously

occupy the living accommodations for the duration of the lease,
the Department presumes that a landlord and tenant have entered
into the lease agreement in good faith and without the intent to
deceive or defraud the State of Florida, or any political
subdivision of the state, of the tax due.

This response constitutes a Technical Assistance Advisement
under s. 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 s. 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 and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Sharon Gallops
Technical Assistant

SG/pb
Cont. #8394