Florida is a fantastic place to call home, for whatever reason you choose. Florida features miles of beautiful beaches, a fantastic climate, and many attractions and amenities. As we get into the swing of tax season, and our finances are on our minds more than usual, Florida can become an even more attractive place to live. Florida offers a range of tax advantages, and below you will see our top 3!
No State Income Tax
Florida is one of only a handful of states that don't collect income tax on a state level, in addition municipalities and counties are also prohibited from levying personal income tax. Moving to Florida can save someone thousands or even millions of dollars in income tax each year. The prohibition against collecting income tax is part of the Florida Constitution so it is very unlikely this will change anytime soon.
No Estate or Death Tax
The Florida Constitution also prohibits the state from imposing an estate or inheritance tax like many other states. Again, because this prohibition is outlined in the state constitution, it is very unlikely this will be changing.
Tax Benefits for a Primary Residence
If you buy a home in Florida and declare it your primary homestead, aside from asset protection benefits, you will also receive two property tax benefits. You will receive an exemption for the first $50,000 of value for property tax purposes. Once the property is qualified for the homestead exemption, the assessed value for tax purposes cannot rise more than 3% in any given year. Thus, over long periods of time, a property’s market value will not increase more than its assessed value, resulting in equity which you don’t have to pay tax on.
In addition, the Homestead Law in Florida protects residents of Florida from losing their home to a creditor or any other lien holder, except for mortgages. This protection is also found in the Florida Constitution, again ensuring that this protection will be in place for a long time. This law gives a great peace of mind knowing that should something occur, your home is safe.
Establishing residency in Florida is slightly more complicated than just owning a home with a Florida address. You must live in Florida for at least 6 months of the year to establish residency and also qualify as a non-resident of your original state. There are several things you can do to help establish the intent of becoming a resident of Florida: obtain a Florida driver’s license, register to vote, file a Declaration of Domicile with the County Clerk of Courts, file for the Homestead Exemption, and focus one’s major affairs and relationships in Florida.
**This is not official legal or financial advice. For more information contact a licensed tax professional. We are not responsible for outdated information included in this post.