A man and his teenage daughter have been arrested in Florida after police say they were caught having sex with one another in a backyard.

Justin Bunn, 39, and Taylor Bunn, 19, were arrested in Panama City at 11am on Tuesday and charged with felony counts of incest stemming from an alleged sexual encounter that took place on February 18.

According to a police report, a witness claimed to have seen the father-daughter duo 'having sexual intercourse in a missionary position’ on a property in the 2900 block of East 5th Court in Panama City.

Father-daughter duo: Justin Bunn, 39 (left) and his 19-year-old daughter Taylor Bunn (right) have been arrested on felony incest charges in Florida

When questioned by police after his arrest, Mr Bunn reportedly confessed to having consensual sex with his own daughter, but claimed that it was 'an isolated incident,' reported The Smoking Gun.

Ms Bunn also admitted to having a consensual sexual intercourse with her father, according to the document.

A judge has set bonds for the father and daughter at $5,000 and $1,000, respectively.

The Bunns also have been ordered to have no contact of any kind with each other.