A Florida TaxWatch report published this week found that 19 percent of vacation rentals in Florida are unlicensed, posing risks to renter safety, creating unfair competition, and leading to significant tax revenue losses, amidst the state’s tourism sector reaching record visitation and spending levels.
A Florida TaxWatch report published on Thursday drew attention to unlicensed vacation rentals, comprising 19 percent of all listings, as a growing concern in Florida’s tourism sector.
The report, which scrutinizes the impact of these rentals on the state’s economy, found an estimated 25,457 unlicensed properties active on any given day in November 2023.
According to the organization, licensed properties often bypass the legal requirements of licensed operations, such as safety standards, registration fees, and tax obligations. The report further states that the financial impact of unlicensed operations is substantial, with the loss of registration costs ranging from $1.8 million to $6.9 million, while local communities potentially forfeit up to $32,000 daily in local option transient taxes due to unlicensed activities.
“Although illegal, the practice of operating an unlicensed short-term vacation rental has become all too common,” the report reads. “When left unaddressed, unlicensed vacation rentals risk the wellbeing of renters; create a considerable cost advantage over legitimately operated and licensed public lodgings; and fraudulently withhold tax dollars, increasing the cost burden on dutiful, taxpaying businesses and residents.”
A University of Central Florida study cited in the report estimates that 27 percent of vacation rental bookings occur outside major hosting platforms like Airbnb and Vrbo, making it difficult to monitor these unlicensed properties.
To address the emerging issues, Florida TaxWatch recommends several key measures, such as the establishment of a reliable source for vacation rental data, requiring registration numbers in hosting platform listings, and the creation of a system for hosting platforms to collect and remit taxes uniformly.
Florida TaxWatch also calls for an increased involvement of active stakeholders like the Department of Business and Professional Regulation, tax collectors, and vacation rental operators in regulatory discussions.
The findings come as Florida’s tourism industry is reaching peak visitation levels, as highlighted in a recent study commissioned by VISIT FLORIDA this week. The state welcomed an influx of 137.4 million visitors in 2022, marking an increase compared to years prior. The surge in visitation resulted in travelers spending a total of $124.9 billion in the state, an uptick of nearly $20 billion compared to the spending in 2021.
The VISIT FLORIDA study also found that 97 cents of every dollar spent by visitors remained within the Florida economy. Moreover, visitor expenditure contributed approximately $333 million daily to the state’s economic activities. In total, Florida tourism generated a total of $35.2 billion in taxes, $18.9 billion in federal tax revenue, $8.1 billion in Florida state tax revenue, and $8.2 billion in local tax receipts.