Whether thinking of taking up life as a snow bird or moving for more long-term reasons, purchasing a home in Florida can come with a number of advantages. Aside from the sunshine, two tax advantages can include:
- Estate tax. Those looking to put together an estate plan and better ensure their wealth survives for future generation are wise to consider a move to Florida. The state, unlike New York or Massachusetts, does not have a state estate tax. This means the state does not impose a tax on the estate when transferred to future generations.
- Income tax. High tax states like New York, Connecticut and California took a big hit when tax reform limited the state and local tax deduction (SALT) for federal tax returns. This led to higher tax bills for those in these states, increasing the lure of the fact Florida has no income tax.
According a recent piece in The Wall Street Journal, these incentives can translate to tens of thousands of dollars in savings…and buyers are interested. The luxury real estate market, or those that make up the top 10% of listings, is thriving in Florida.
It is important to note simply purchasing a home in Florida is not necessarily enough to receive these tax savings. State tax authorities may claim you still reside within their state and are subject to state taxes. As such, it is important to review the rules to better ensure you are deemed a resident of Florida for tax purposes. These rules can include a review of the number of days spent in the state and where you keep your financially and sentimentally valuable possessions.
Another consideration are the potential risks that can come with negotiating the purchase of a home in Florida. Those looking to purchase a home in the state can better ensure a smooth transaction by seeking legal counsel. An attorney experienced with the nuances of Florida real estate law can review and negotiate a contract on your behalf, mitigating the risk of any surprises within the home purchase agreement.