Did a Florida homeowners' association have to collect admissions tax on mandatory assessments used to maintain common recreational areas?

Plain-English summary

Florida concluded that a homeowners' association did not have to collect sales tax on mandatory assessments used to maintain its common recreational facilities.

The association's clubhouse, pool, restaurant, and fitness center were common facilities. Residential and marina owners were required to belong to the association and pay the assessment as a condition of ownership; nonpayment could result in a lien. The fee covered the capital and operating costs of the common facilities.

Florida normally taxes dues and fees paid to clubs that provide recreational or fitness facilities. But Fla. Admin. Code R. 12A-1.005(4)(d)3. excepts mandatory condominium, homeowners'-association, and cooperative-association dues when payment is required by ownership or occupancy and the facilities are common elements or common areas.

The TAA limited the result: the assessment had to remain a common-area maintenance charge rather than a fee that itself entitled a member to use the facilities. Separate access charges would not qualify.

What this means for you

Homeowners' associations

Document that the assessment is mandatory under the governing documents, tied to ownership or occupancy, and used for common-area costs.

Property owners and managers

A separately charged recreational access fee is different from a mandatory ownership assessment and may be taxable as an admission.

Common questions

Were the mandatory recreational-facility assessments taxable? No, while they satisfied Rule 12A-1.005(4)(d)3.

Did the exception apply merely because the association was nonprofit? The ruling relied on the mandatory ownership condition and common-area use, not nonprofit status alone.

Would a separate fee for facility access qualify? No. The TAA said other fees associated with access would not qualify.

Citations and references

• Fla. Stat. Sec. 212.02(1)
• Fla. Stat. Sec. 212.04(1)(a)
• Fla. Admin. Code R. 12A-1.005(4)(d)3.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 22A-013

Original ruling text

QUESTION: Does Taxpayer, as a homeowner’s association, need to charge sales tax for a fee
to cover upkeep costs for common areas?
RESPONSES: No. Taxpayer, as a homeowner’s association, has an exception for mandatory fees
charged to its members that go towards upkeep costs of common areas.
June 20, 2022
Re:

Technical Assistance Advisement – TAA #: 22A-013
Sales and Use Tax – Admissions
Section 212.02(1) and 212.04(1)(a), Florida Statutes (“F.S.”)
Rule 12A-1.005(4)(d)3., Florida Administrative Code (“F.A.C.”)
BP No.: XXXX
FEI No.: XXXX
XXXX (“Taxpayer”)

Dear XXXX,
This is in response to your letter dated April 07, 2021, requesting this Department’s issuance of
a TAA pursuant to Section 213.22, F.S., and Chapter 12-11, Florida Administrative Code, regarding
Association Membership. Your request has been carefully examined, and the Department finds
it to be in compliance with the requisite criteria set forth in Chapter 12-11, F.A.C. This response
to your request constitutes a TAA and is issued to you under the authority of s. 213.22, F.S.
Stated Facts
XXXX (“Taxpayer) is organized and licensed as a homeowner's association. Pursuant to Taxpayer’s Articles
of Incorporation, Taxpayer does not contemplate pecuniary gain or profit. The general purpose of this
association is to promote the common interest of the property owners by performing functions such as:

1. fixing, levying, collecting and enforcing payment, by any lawful means, of all charges or
   assessments pursuant to the terms of the Master Declaration XXXX ("Master Declaration"), and
2. maintaining, repairing and replacing common properties as contemplated by such Declaration.
   Taxpayer categorizes owners as “Class A” for Residential Owners, and "Class C" for Marina Owners. Both
   classes of owners are required to be members of the association.
   Taxpayer owns facilities ("Recreational Facilities") that consist of a clubhouse, pool, restaurant, and fitness
   center. According to the Master Declaration, Taxpayer judges the use of the Recreational Facilities as an
   easement. Taxpayer charges its members an assessment fee ("Recreational Facility Assessment") to cover

Florida Department of Revenue
Page 2

the capital and operations costs of running the Recreational Facilities which are located in common areas
available to Association Members. A member's nonpayment will result in a lien being placed on the
member's property. This lien policy is stated in the Amenities Declaration.
Taxpayer provided a copy of the following documentation for the Department’s review:
1.
2.
3.
4.

Articles of Incorporation of XXXX
Master Declaration for XXXX
By-Laws of XXXX (A Corporation Not for Profit)
Amenities Declaration for XXXX

Requested Advisement
Is the Recreational Facility Assessment for the two classes taxable?
Taxpayer Position
The Taxpayer concludes that the Recreational Facility Assessment is not taxable. Taxpayer cites
Rule 12A-1.005(4)(d)3., F.A.C., as the reasoning.
Law and Discussion
Section 212.04(1)(a), F.S., indicates. “. . . [it is] the legislative intent that every person is exercising
a taxable privilege who sells or receives anything of value by way of admissions.”
Section 212.02(1), F.S., defines the term “admissions” as “. . . 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 . . . and 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, . . .”
Rule 12A-1.005(4)(d)3., F.A.C., provides the following:
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 condominium association, homeowners'
   association, or cooperative 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. (Emphasis
   added.)

Florida Department of Revenue
Page 3

As required by the Rule, and based on the facts and documentation provided:

1. Taxpayer is licensed by the Florida Department of Business and Professional Regulation
   (“DBPR”) as a homeowners’ association.
2. The Recreational Facility Assessment is to cover the Recreational Facilities which are
   described by the Taxpayer to be common elements and/or common areas.
3. Joining the Association and paying the Recreational Facility Fee is mandatory for the
   Residential Owners and Marina Owners.
   As provided by the Rule 12A-1.005(4)(d)3., F.A.C., and based on the facts and documentation
   provided, the above-described mandatory Recreational Facility Fee paid by homeowners’
   association Class A and Class B members, to Taxpayer for maintaining the common elements or
   common areas of the community—i.e., Recreational Facilities—are not subject to sales tax.
   Conclusion
   Taxpayer's Recreational Facility Assessment will not be subject to sales tax so long as the criteria
   provided by Rule 12A-1.005{4)(d)3., F.A.C., are satisfied.
   The fee must only be used to pay for Taxpayer’s costs for common areas maintenance and cannot
   entitle the members to use the areas. The Class A and Class C memberships meet the criteria for
   the exception. Other fees associated with access to the area itself would not qualify.
   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
   advice 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 Section 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 ten (10) days of the
   date of this letter.
   If you have any further questions with regard to this matter and wish to discuss them, you may
   contact me directly at (407)648-2993.

Florida Department of Revenue
Page 4

Best Regards,

Adam Duh
Adam Duh
Tax Law Specialist
Technical Assistance & Dispute Resolution
(407)648-2993