How to Rent Out Your Condo in Miami: Rules, Taxes and Yield

Long-term vs. short-term rentals

A long-term rental usually means a lease of several months to a year or more to a tenant who lives in the unit. It tends to produce steadier income, lower management costs and fewer regulatory hurdles. A short-term rental means stays of days or weeks, similar to a hotel, which can generate higher nightly rates but brings more costs, more turnover and far more restrictions in Miami.

For most international owners, the realistic choice depends less on preference and more on what the building and the city allow. That is why rental rules should be checked before you buy, not after.

Condo association rules: check before you buy

Many condo associations in the Miami area restrict rentals through the declaration of condominium, bylaws and rules. Common restrictions include minimum lease terms (for example, several months or a year), limits on the number of leases per year, a waiting period after purchase before you can rent, and an approval process for tenants that may include an application, background check and fee.

Always read the current declaration, bylaws and rules, and any amendments, before making an offer. Your agent can request them, and the association’s estoppel or questionnaire may confirm current policies. Buildings known as “rental-friendly” do exist, including some that allow shorter minimum terms, but even in those, policies can change through amendments, so verify the current documents rather than relying on reputation.

• Minimum lease term and maximum leases per year
• Waiting period after purchase before the first lease
• Tenant application, approval timeline and fees
• Security deposits required by the association
• Rules on short-term or hotel-style rentals

City rules for short-term rentals in Miami

Local rules vary by municipality. Miami Beach prohibits short-term rentals, defined as stays of less than six months and one day, in most residential districts, and enforces the ban with substantial fines. Some specific zones and properties are exceptions, so verify the zoning of any address.

In the City of Miami, short-term rentals require registration and certificates with the city, compliance with zoning, and permission from the condo association; in practice, many building rules prohibit them regardless of what the city allows. Other municipalities, such as Coral Gables, Sunny Isles Beach or Surfside, have their own rules. Florida also generally requires a state vacation-rental license for condos rented on a transient basis.

Because these rules are enforced actively and change from time to time, confirm them with the city and a local attorney before you plan a short-term strategy.

Florida rental taxes on stays of six months or less

In Florida, rentals of six months or less are considered transient rentals and are generally subject to state sales tax plus local taxes, such as the county discretionary sales surtax and tourist development or resort taxes. The combined rate depends on where the property is located. Owners or their managers must register, collect and remit these taxes, although some booking platforms collect certain taxes on the host’s behalf.

Long-term residential leases of more than six months are generally not subject to these transient rental taxes. Confirm current rates and filing obligations with the Florida Department of Revenue, Miami-Dade County and your accountant.

US taxes on rental income for foreign owners

Florida has no state personal income tax, but federal rules apply. By default, rental income paid to a nonresident alien is subject to 30% US withholding on the gross rent, collected by the tenant or property manager, with no deductions for expenses. On a typical condo, that can consume most or all of the real profit.

Most foreign owners instead elect to treat their rental income as effectively connected with a US trade or business. They give the property manager or tenant Form W-8ECI, which generally stops the 30% withholding, and they file an annual US tax return, typically Form 1040-NR, reporting net income after deductions such as HOA fees, property taxes, insurance, management, repairs, mortgage interest and depreciation. You will need an ITIN to file.

If you own through an LLC, corporation or trust, the rules and forms differ. Tax treaties may also affect your situation. Work with a US CPA or tax attorney who handles foreign owners before your first lease begins.

Property management costs

Unless you live nearby, a property manager is usually essential. For long-term rentals, managers often charge a percentage of the monthly rent, frequently in the high single digits to around 10%, plus a leasing fee when they place a new tenant. Short-term management, where permitted, typically costs considerably more, and you also pay for cleaning, furnishing, supplies and platform fees.

Ask what is included: tenant screening, association approval paperwork, rent collection, maintenance coordination, inspections, monthly statements and handling of tax forms.

How to estimate your yield when you rent out a condo in Miami

Gross yield (annual rent divided by price) is easy to calculate but can be misleading. Net yield subtracts the real costs of owning the unit, and in Miami, HOA fees and property taxes can take a large share of the rent.

As a purely hypothetical illustration: a $600,000 condo renting for $4,000 per month earns $48,000 a year. Subtracting $12,000 in HOA fees, about $12,000 in property taxes, $1,500 for insurance, roughly $3,800 for management and one month of vacancy ($4,000) leaves about $14,700 before income taxes and financing costs, a net yield of roughly 2.4%. Your numbers will differ by building and unit, which is why comparing buildings carefully matters. S&S Real Estate Miami’s bilingual advisors can help you gather rent comparables and building costs for the units you are considering.

• Start with realistic market rent, based on recent comparable leases
• Subtract HOA fees, property taxes and insurance
• Subtract management, leasing fees and maintenance
• Allow for vacancy and turnover between tenants
• Account for income taxes and any mortgage payments

Disclaimer

This guide is for general information only and is not legal, tax or financial advice. Rental rules, tax rates and filing requirements change and depend on your situation, the building and the municipality. Consult a qualified US CPA, tax attorney or Florida real-estate attorney before renting your property.