Newly Remodeled Condominium Aria On Longboat Key
Now more than ever, Florida’s tax laws make residency an absolute must for high-income individuals.
Thinking of moving to Florida? Now’s the time. Thanks to a new tax law, for every day you spend in a state that charges its residents income tax at the state level, you’re paying out tax dollars you won’t ever see again.
Last December, the federal government passed a tax overhaul that enacted, among other things, a $10,000 limit on deductions for state and local taxes (SALT)—including property taxes—combined.
In most states, your income is taxed on both the federal and the state levels, and you also pay local taxes on any property you own, but at least you could retrieve a chunk of that money back through deductions. Now that your deductions are capped at $10,000, paying double the income tax is that much worse. You won’t see that money again.
But Florida is one of only three states in the country (along with Arizona and Texas) that doesn’t charge income tax on the state level. Which means that once you establish yourself as a Florida resident, your $10,000 deduction can be dedicated entirely to recouping your federal taxes.
Consider, too, Florida’s Homestead Property Tax Exemption, which allows a claim of up to $50,000 annually on a primary residence.
Florida has long been an appealing draw for its weather, year-round lifestyle, and spectacular beaches. That attraction has fueled a robust luxury home market, with limitless resources available to find your dream home—or build it yourself.
Now, the tax laws have made Florida an even more attractive place for retirees, especially for high-income executives who otherwise stand to pay out a lot of money in state income tax, and for luxury property owners paying sizeable taxes on the value of their home. In other states, salaries, pensions, stock liquidation and other payoffs are all subject to double the income tax. Consider how much you’ll pay to both the federal and state governments. How much of a dent in your total tax burden does a $10,000 deduction make? Far too small, we suspect.
In short, establishing Florida residency before the first of the year could have a seismic effect on how much of your own money you can keep come tax time.
Lots of high-earners have already recognized this, of course. In February, the New York Post reported a “stampede” of well-to-do New York business people moving to Florida. That stampede is driving a surge in luxury-home prices. Those home buyers who act fast and buy now will be rewarded not just in tax exemption, but in higher property value—an exceptional return on their investment. The weather is great, the taxes are lower, and the demand for Florida luxury homes is unlikely to slow down any time soon.
Come 2019, where will you be putting your money?