Were mandatory assessments paid by resident homeowners for association-owned common areas subject to Florida admissions tax?

Plain-English summary

Florida found that the mandatory assessments paid by the association's resident homeowners were not taxable admissions. The payments were required by the community's governing documents as a condition of owning a parcel, could become a lien if unpaid, and funded association-owned common areas.

The association had absorbed a private country club and then divided its membership into several classes. Resident Regular and Resident Social members paid assessments that included both the community's original common-area costs and pro rata maintenance costs for the acquired recreational facilities. Resident Non-Recreational members paid only the original common-area portion.

The Department concluded that all three resident-owner classes met Rule 12A-1.005(4)(d)3. The assessments were mandatory, paid to a homeowners' association, tied to ownership of real property, and used for facilities that were part of the association's common areas.

Optional and nonowner recreation charges remained taxable

The result did not cover every payment to the association. Resident Social members paid taxable user fees when they chose to play golf. Other optional user fees were also taxable. Non-Residential Recreational members did not own parcels in the community, so their recreation dues and fees did not satisfy the ownership-based rule and were taxable admissions.

What this means for you

Homeowners' associations

Mandatory owner assessments can avoid admissions tax when the governing documents tie payment to parcel ownership and the association owns the maintained facilities as common areas. The ruling relied on the actual covenants, easements, assessment rights, and lien remedies—not merely the label placed on the charge.

Property managers and accountants

Separate mandatory assessments from optional recreation charges and nonowner memberships. One association can collect both nontaxable owner assessments and taxable golf, recreation, or associate-member fees.

Homeowners

The ruling covered the described resident-owner assessments, including different assessment amounts by membership class. It did not create a general exemption for every HOA or club payment.

Common questions

Q: Were the resident owners' mandatory assessments taxable admissions?
A: No. They met all four requirements in Rule 12A-1.005(4)(d)3.

Q: Did access to association recreational facilities make the assessments taxable?
A: No under these facts. The facilities were association-owned common areas, and the assessments were required by property ownership and paid pro rata by resident membership class.

Q: Were golf user fees paid by Resident Social members taxable?
A: Yes. The ruling treated those optional golf charges as taxable admissions.

Q: Were fees paid by nonresident recreational members exempt?
A: No. Those members did not own parcels in the community, so their fees did not qualify for the ownership-based HOA rule.

Q: What happened if a resident owner did not pay an assessment?
A: The governing documents allowed the association to place a lien on the parcel and potentially foreclose.

Citations and references

• Fla. Stat. § 212.02(1) — admissions include certain dues and fees paid to recreational private or membership clubs
• Fla. Stat. § 212.04(1) — sales tax on admissions
• Fla. Stat. § 720.301 — assessments, common areas, governing documents, homeowners' associations, and parcels
• Fla. Stat. § 720.303(1) — association powers and duties
• Fla. Admin. Code r. 12A-1.005(4)(d)3. — mandatory HOA charges tied to real-property ownership and common-area facilities
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-028

Original ruling text

QUESTION: Are mandatory assessments paid to a homeowner
association subject to the sales tax imposed on the sale of
admissions.

ANSWER - Based on Facts Below: No. The assessments paid to
the homeowner association were required as a condition of
home ownership for property located in the community
related to the homeowner association. The payments were
mandatory. The assessments were pro rata payments by the
members used to pay for the maintenance of the common areas
owned by the association. When a member fails to pay the
assessment, the association is entitled by virtue of the
governing documents to place a lien against the owner's
residential property. The association may foreclose on the
residential property for failure to pay the assessment.

Apr 12, 2004

Re: Technical Assistance Advisement 04A-028
Sales and Use Tax
Homeowner Association Dues
Section 212.04, F.S.
Section 212.02(1), F.S.
Section 720.301, F.S.
Rule 12A-1.005(4)(d)3., F.A.C.
XXX ("Association")
FEI #: XX
XXX ("Club")
XXX ("Community")

Dear :

This letter is in response to your request for a Technical
Assistance Advisement, dated November 9, 2003.

FACTS

Association is a not-for-profit Florida member owned corporation
organized as a homeowner association on the behalf of
Association's members. Association is incorporated as a
homeowner association pursuant to Chapter 720, F.S. Prior to
May 2003, each parcel owner and homeowner in Community was a
member of Association and paid the same mandatory assessment
that covered such things as maintenance of streets, sidewalks,
street lights, street signs, security services including the
maintenance of the guardhouse, beautification and common area
landscaping, cable television and other special programs.

Club was a not-for-profit, non-stock Florida corporation
organized pursuant to Chapter 617, F.S. Club owned and operated
a private country club for the recreation, pleasure, and benefit
of its members. Club's by-laws permitted two classes of equity
membership (Regular and Social), as well as non-equity
membership classes. Club's Regular members had full use rights
and access to Club's recreational facilities, whereas Social
members were required to pay user fees for use of the golf
course and were prohibited from golfing during certain times of
the year. Social members paid XXX of the annual dues of the
Regular members. Association's members were not required to be
a member of Club. Most of Club members were also members of
Association prior to XX.

Association obtained Club's assets pursuant to a statutory
merger in XX. Association became the surviving entity after the
merger. After the merger, the Association is permitted by the
amended governing documents to have XXX members in four
different classes. The types of members are Resident Regular,
Resident Social, Non-Residential Recreational, and Resident NonRecreational members. Non-Residential Recreational members pay
fees for the use of Association facilities. Sales tax is
collected on these fees.

The amended Association governing documents burden the Community
property owned by Resident members, requiring an assessment
payment that varies in amount depending on the type of
membership associated with the property. The assessment is for
the maintenance of Association property. The amended
Association governing documents, including the amended

Declaration of Covenants, provide the Community property with
easement rights to Association property. The amended governing
documents, including the amended Declaration of Covenants,
provide that the easement is perpetual and nonexclusive and will
be appurtenant to and will pass with the title to each parcel.

The number of Non-Residential Recreational members is limited to
a maximum of XXX members. The Association governing documents
require a minimum number of XXX Resident Regular members as of
2007. The number of Resident Social members is restricted to a
maximum of XXX members. The easement for the property owned by
Resident Regular members permits the members to play golf and
otherwise use all Association facilities obtained from Club
without any additional user fees, whereas Resident Social
members are more restricted as to when they may golf. Resident
Social members must pay user fees to play golf. Resident NonRecreational members may not use recreational facilities
obtained from Club by Association. Club members who were not
Community property owners became Non-Resident Recreational
Associate members. As of XX, the Association membership
consisted of the following:

Resident Regular members

XXX

Resident Social members

XXX

Resident Non-Recreational members
Total Resident members

XXX
XXX

Non-Resident Recreational Associate members
Total Association members

XXX

XXX

The assessment for all Resident members includes a pro rata
share of maintenance costs related to the property owned by
Association prior to the merger. This includes the assessment
that covers such things as maintenance of streets, sidewalks,
street lights, street signs, security services including the
maintenance of the guardhouse, beautification and common area
landscaping, cable television and other special programs.
Resident Non-Recreational members only pay this portion of the
assessment. Resident Regular and Social members pay an
additional amount on a pro rata basis by membership class for
the maintenance costs of the facilities purchased from Club.
Social members pay XX of the assessment amount charged to

Regular members. Non-Resident Recreational Associate members
pay only user fees on which the sales tax is collected. Social
members are required to pay the sales tax on user fees charged
by Association to Social members to play golf. Sales tax is
collected on all other optional user fees.

Resident Non-Recreational Members consist of Community
homeowners who prior to the merger were not Club members. No
additional members may be added to this class of membership.
The governing documents provide that all buyers of a home from a
Resident Non-Recreational Member become a Resident Regular
Member of Association by virtue of the purchase. Eventually,
the entire Resident Non-Recreational member class will be
eliminated once all homes owned by the current members in this
class are sold.

Resident Social members of Association may request an upgrade to
Resident Regular membership. Resident Regular members may not
freely change to a Resident Social member. However, Association
permits the change if certain procedures required by Association
are satisfied. Even if all procedures are satisfied, the
governing documents restrict the number of annual changes to
Social members.

Association has the right to place a lien against the property
of any Association Resident member who defaults on any
assessment, including the assessment described herein.
Association may foreclose on the Community property owned by an
Association Resident member for failure to pay the lien.

All fees or dues collected from Association's Non-Resident
Recreational members of any type include sales tax on their
respective dues and fees, since such members do not have a
property interest in the Community. All Association members are
billed sales tax for optional user fees and charges for items
such as cart/trail fees.

ISSUE

Are the mandatory assessments described herein paid by
Association's Resident members to Association subject to the

sales tax on admissions?

APPLICABLE STATUTES AND RULES

Section 212.02(1), F.S., provides:

(1) The term "admissions" means and includes the net sum of
money after deduction of any federal taxes for admitting a
person or vehicle or persons to any place of amusement,
sport, or recreation or for the privilege of entering or
staying in any place of amusement, sport, or recreation,
including, but not limited to,... all dues and fees paid to
private clubs and membership clubs providing recreational
or physical fitness facilities, including, but not limited
to, golf, tennis, swimming, yachting, boating, athletic,
exercise, and fitness facilities....

Section 212.04(1), F.S., provides:

(1)(a) It is hereby declared to be the legislative intent
that every person is exercising a taxable privilege who
sells or receives anything of value by way of admissions.

(b) For the exercise of such privilege, a tax is levied at
the rate of 6 percent of sales price, or the actual value
received from such admissions, which 6 percent shall be
added to and collected with all such admissions from the
purchaser thereof, and such tax shall be paid for the
exercise of the privilege as defined in the preceding
paragraph....

Rule 12A-1.005(4)(d)3., F.A.C., provides:

(d) 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... homeowners'
   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.

Sections 720.301-720.312, F.S., govern procedures required by
entities protecting the rights of homeowner association members.
Section 720.301, F.S., provides in part:

(1) "Assessment" or "amenity fee" means a sum or sums of
money payable to the association, to the developer or other
owner of common areas, or to recreational facilities and
other properties serving the parcels by the owners of one
or more parcels as authorized in the governing documents,
which if not paid by the owner of a parcel, can result in a
lien against the parcel.

(2) "Common area" means all real property within a
community which is owned or leased by an association....

(3) "Community" means the real property that is or will be
subject to a declaration of covenants which is recorded in
the county where the property is located. The term
"community" includes all real property, including the
undeveloped phases, that is or was the subject of a
development-of-regional-impact development order, together
with any approved modification thereto.

(4) "Declaration of covenants," or "declaration," means a
recorded written instrument in the nature of covenants
running with the land which subjects the land comprising
the community to the jurisdiction and control of an
association or associations in which the owners of the
parcels, or their association representatives, must be
members....

(6) "Governing documents" means:

(a) The recorded declaration of covenants for a community,
and all duly adopted and recorded amendments, supplements,
and recorded exhibits thereto; and

(b) The articles of incorporation and bylaws of the

homeowners' association, and any duly adopted amendments
thereto.

(7) "Homeowners' association" or "association" means a
Florida corporation responsible for the operation of a
community or a mobile home subdivision in which the voting
membership is made up of parcel owners or their agents, or
a combination thereof, and in which membership is a
mandatory condition of parcel ownership, and which is
authorized to impose assessments that, if unpaid, may
become a lien on the parcel....

(8) "Member" means a member of an association, and may
include, but is not limited to, a parcel owner or an
association representing parcel owners or a combination
thereof.

(9) "Parcel" means a platted or unplatted lot, tract, unit,
or other subdivision of real property within a community,
as described in the declaration:

(a) Which is capable of separate conveyance; and

(b) Of which the parcel owner, or an association in which
the parcel owner must be a member, is obligated:

1. By the governing documents to be a member of an
   association that serves the community; and

2. To pay to the homeowners' association assessments that,
   if not paid, may result in a lien.

(10) "Parcel owner" means the record owner of legal title
to a parcel....

Section 720.303(1), F.S., provides:

(1) POWERS AND DUTIES. -

An association which operates a community as defined in s.
720.301, F.S., must be operated by an association that is a

Florida corporation.... An association may have more than
one class of members and may issue membership certificates.

RESPONSE

Section 212.04(1), F.S., imposes sales tax on the sales price of
admissions, as defined by section 212.02(1), F.S. Section
212.02(1), F.S., includes payments of dues or fees to membership
clubs as admissions. Rule 12A-1.005(4)(d)3., F.A.C., provides
an exclusion from the definition of fees subject to tax where
the payment does not represent payment for the right to use
recreational facilities. Rule 12A-1.005(4)(d)3., F.A.C., has
four requirements. The fee or assessment must be: (1)
mandatory, (2) paid to a homeowners' association, (3) required
to be paid as a condition of ownership of real property, and (4)
must be paid for club facilities that are part of the common
elements or common areas of the real property.

Here, based on the documents and facts provided, the assessments
are mandatory and paid to a homeowner association as required by
the Rule. Furthermore, the governing documents provide that the
assessment payments by Residents described herein are required
to be paid as a condition of ownership of real property. The
assessments charged by Association to Resident members will
result in a lien placed against the homeowner's parcel for
failure to pay the assessment, as permitted by section
720.301(1), F.S. Failure to pay the lien may result in
foreclosure and loss the home by the Association member.

Furthermore, based on the documents provided, the assessments
are paid to maintain Association facilities that are part of the
common areas owned by Association, as required by section
720.301(3), F.S. Here, Association owns the common areas,
including the recreational facilities. Assessments are made on
a pro rata basis per member class for each parcel within the
class. As such, the assessment payments by Association's
Resident Regular, Resident Social, and Resident Non-Recreational
members described herein meet the criteria of Rule 12A1.005(4)(d)3., F.A.C.

Therefore, the sales tax imposed on the sale of admissions as

provided by section 212.04(1), F.S., does not apply. Optional
payments for use of the facilities, such as user fees for the
golf course by Association's Resident Social Members are taxable
admissions. However, payments by members not owning parcels do
not satisfy the requirements of Rule 12A-1.005(4)(d)3., F.A.C.
As such, user fees for the use of recreational facilities are
subject to sales tax.

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 advise 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 s. 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 15 days of the date of this letter.

Sincerely,

Charles Wallace
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 922-4734

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