So I was thinking about a house swap with like-minded travelers-for my 750-square-foot cottage in Old Town for, say, an Italian villa in Positano, along the Amalfi coastline. A couple of weeks in the dead of winter seemed like a reasonable trade to me: Key West's hot destination-high season for Italy's hot destination, but during its chilly-weather off-season would be the great equalizer of property size.
Lots of online swap companies, like exchangeaway.com, lovehomeswap.com, homelink.org, are free for lookers, although you have to join to get names and contacts.
"I was about to join" fees range from $9.95 per month to as much as $500 per year. When I inadvertently mentioned my plan to Jim Young, Key West's senior manager of Code Compliance, while I was researching this article about house rentals.
"In 2005, a case was brought against a local homeowner and the company that arranged the trade," said Young. Apparently, special magistrate J. Jefferson Overby ruled that house swapping "is a form of remuneration" akin to collecting rent money.
Randy Pekarik, an investigator for Monroe County Property Appraisers, who among other things is charged with protecting the integrity of the county tax base, reiterated that house swapping "can be construed as a form of rental; you can even lose your homestead tax exemption," he said.
This exemption can be as much as $50,000 off the assessed value of a property used as the owner's primary residence. So this jumbo surprise took the fun right out of the travel I planned, and really took the edge off the cost savings associated with house swaps.
In fact, Pekarik emailed "A Taxpayer's Guide to Property Appraisal and Home Exemption" brochure, which asks the question, "Can I rent my home?" The brochure's answer, "Generally, no" clarifies exemptions, discusses fraud and lists the top 5 reasons homesteads are lost: #1 is due to renting a primary residence.
Buying a house and renting it long term to someone else is not the issue here; the complexity comes when you want to rent a house you own and live in, too. It can be done -- you can even swap your house -- the key has to do with licensing and how long you rent your property.
"Licenses, also known as business tax receipts, are required for both transient ($27.30 per year) and non-transient ($19.95 per year) rentals. A rental business tax is just like the tax on any business in town," said Carolyn Walker, chief licensing official and administrative manager, in response to my email inquiry. "If a homeowner works through a property manager, typically the management company acquires the license for the client, but the application and fee is the same."
She added that the "transient license also requires a regulatory license ($125 per year), which is charged to offset the enforcement costs for transients."
Walker also noted that the pertinent ordinance sections 66-109 relate to the schedule of taxes, and sections 122-1371 relate to transient living accommodations in residential dwellings. Details can be found at citykeywest.com/departments/code compliance services, but reading this stuff is not nearly as exciting as reading Keys Homes.
Because most of us don't have transient licenses, which allow daily or weekly rentals, renting your primary residence is all about non-transient licenses. If you want to rent, even swap your house, you have to have this $19.95 license; what's more, your rental has to be for at least one calendar month, or 30 days, or you risk getting fined and, if you have one, losing your homestead exemption.
Creative interpretation of city codes doesn't work, either. Jim Young says you may be held accountable for renting to "roommates" for, say, one weekend (subsection D8 addresses sham roommates), or for renting your home two weeks, although you do it "only one time in a month. Intent is what matters," he said.
Intent gets into waters as murky as reporting income because, well, following money seems to be the real business of governing bodies. According to local numbers guru, Rick Boettger, there is a special IRS rule "if you use a dwelling unit as a personal residence and rent it for fewer than 15 days," he said. "In this case, do not report any of the rental income and do not deduct any expenses as rental expenses."
Do not pass go, and do not even consider renting your home if you don't have an official city license, which can be obtained through Carolyn Walker's office at the City Hall on Flagler.
With more than a million visitors to our 2-by 4-mile island each year (in 2012: by cruise ship 813,713; by ferry boat 70,125; by airplane 367,615, plus tens of thousands more traveling here by car), giving them a place to rest their weary heads is big business. Right now on just one internet rental source, Vacation Rental By Owner (VRBO.com), there are 819 houses and/or apartments for rent in Key West that are vying with the hotel/resort rental business.
In a perfect world there is room for all, and renting your home, especially when you're traveling, sounds like a good way to pick up cash to pay those pesky insurance premiums. But first, you might want to become a Doctor of Jurisprudence.
At the very least, if you go through all the trouble to swap your little Conch house for a villa in Italy -- a really good trade in my opinion, do it for a minimum of 30 days.
Barbara Bowers is a Key West writer and host of a radio talk show about owning and maintaining property in the Florida Keys. To suggest a home to be featured in the Keys Homes section, send an email to email@example.com. Homes listed for sale may not be considered.