Anna Maria Island Real Estate Sales Blog

Most homeowners in Holmes Beach, Anna Maria or Bradenton Beach never think about how they may be at risk if they rent their docks to others. Here's a timely reminder as published in today's Sun Sentinel.

Many homeowners in the dark over Florida’s dock rental sales tax

SOUTH FLORIDA – April 2, 2008 – Thousands of South Florida boaters berth their vessels on rented docks behind private homes. It’s a system that provides relief to the region’s crunch for dock space, as well as a modest extra income to the homeowners.

But there’s a wrinkle to this underground economy of which dock-renting homeowners typically are unaware: They have to collect sales tax on the income and remit it to the state.

“They probably didn’t think about the tax consequences,” Jim Evers, director of the tax program at the state Department of Revenue, said from his Tallahassee office. “They probably don’t think it applies to them as individuals.”

Just like commercial marinas, private homeowners are required to collect a 6 percent sales tax from boaters who rent their docks, then periodically send the money to the state.

In waterway-rich South Florida, the law affects thousands. About half of Broward County’s almost 31,000 boat slips are behind private homes. In Palm Beach County, where there are some 22,000 slips total, almost 9,000 are rented out privately, said Alison Pruitt, director of the Marine Industries Association of Palm Beach County.

But dock tax cash is hardly flowing in a torrent to Tallahassee. “Off the top of my head I’d say it’s negligible,” Evers said.

Rates are low for private dock rentals – homeowners charge $11 to $17 per foot of a boat’s length – and the deals usually are based on cash and a handshake. “Typically they owe us less than $500 a quarter,” Evers said.

For Bill Bauer, who rents his backyard Pompano Beach dock part time for $220, the amount would be a paltry $13.20 cents a month – if Bauer knew he had to collect the tax. Like most dock renters, he didn’t.

“It never dawned on me I would have to pay a sales tax,” he said. “It just seems like an unnecessary burden, and something that’s hard to police.”

Indeed, word in the South Florida maritime community was that state revenue agents recently were in the area to sniff out homeowners who weren’t collecting the dock tax. Evers quelled that report.

“To the best of my knowledge I have no agents engaged in this activity,” he said. “We have no active enforcement program.”

The state has no interest in cracking down on homeowners who innocently neglect to collect the tax, Evers said. But it’s another story if they intentionally defraud the state.

“If you collect tax from a customer and fail to remit it, now you’re stealing money,” he said. “We would come after you.” Penalties range from civil fines to criminal charges.

But any homeowner who comes clean with the state can expect leniency. “We would register them and certainly be reasonable,” Evers said. “There would be no penalty.”

Rick Banach, who rents two docks in Fort Lauderdale, has been collecting and paying the sales tax all along. As a landlord who also rents out warehouse space, he’s familiar with the law. “If you lie and get caught, you’re in trouble,” he said.

Alfredo Gracian planned to rent out a dock behind a home he recently bought in Lauderdale-by-the-Sea, but changed his mind upon learning he would have to tax the renter.

“Knowing this, under no circumstance would I consider renting mine,” he said. “I don’t think it’s even worth it.”

Homeowners who rent docks can register with the state at www.myflorida.com/dor, or write the state Department of Revenue, 5050 W. Tennessee St., Tallahassee, Fl., 32399-0100, or call 800-352-3671.

Copyright © 2008 South Florida Sun-Sentinel, Robert Nolin. Distributed by McClatchy-Tribune Information Services.