Timeshare Owners Avoid Pricey Resort Tax
Tuesday, June 13, 2006
Orlando’s bed tax is not an issue for timeshare owners or those who rent timeshare by-owner.
How did you feel when you helped pay for the expansion of the Convention Center in Orlando? And wasn’t that nice of you to underwrite the city bus system there and pay for all those television ads to attract more tourists to Central Florida?
Don’t remember doing that?
If you enjoyed an Orlando vacation and stayed in a hotel or motel room there, then you did donate to a number of city and county projects—in addition to the donation you made via state and county sales tax to the highways, school systems and community services enjoyed by Florida residents.
The Central Florida vacation area, like many other tourist destinations across the country, levies a tourist tax or bed tax on top of their state and local sales tax. Hotel and motel occupants must pay both taxes on every room night booked. And because this double taxation accounts for a minimum of 11 percent of every hotel bill, (more in some areas) it is no wonder travelers reel with sticker shock when they see their final bill.
But residents of The City Beautiful may soon have to find another way to build a new arena for the NBA’s Orlando Magic and a new community performing arts center. Despite the fact that tourism is up in central Florida—hotel occupancy is down. When industry experts went looking for someone to blame for the room night shortage, (because surely the tourists were not all sleeping in their cars) they found the culprit to be timeshare resorts!
According to Staff Writer, Tim Barker, of the Orlando Sentinel in 2001, 10 percent of all visitors to the area stayed in Orlando timeshares. By 2005, that number had increased to 15 percent. Because timeshare owners are actual property owners, they do pay a percentage of their unit’s annual property or real estate taxes. But they are not charged with bed tax or sales tax on timeshare nights because they are sleeping in a bed they actually own.
What’s more, most timeshare renters are not charged the bed tax, if they lease a timeshare property directly from the person who owns it. Until municipal governments figure out how to collect and enforce such an effort, they simply have no way to track or collect the bed tax on individual transactions that often take place online, outside the state of Florida, perhaps even outside the US. The only situation in which timeshare renters are likely to be hit by the bed tax is when they rent timeshare directly from the resort.
So if you are considering selling your Orlando timeshare, the good news is that the Orlando resale market gets stronger and stronger all the time. And if you’d like to hang on to your timeshare resort property and use it as a rental, that market looks equally solid, especially as hotel rates (and their additional taxes) creep upward, already up 9 percent in the first quarter of 2006 compared with 2005.
No wonder even highly