Florida is one of only seven states that does not have an income tax, the others being Alaska, Nevada, South Dakota, Texas, Washington, and Wyoming. Florida has been a popular retirement destination for years because of its great location and climate, but as more people are able to work remotely, the no-tax incentive is attracting non-retirees as well.
Now there is even more of an impetus for people to relocate to Florida with last year’s Tax Cuts and Jobs Act, which limits the deductibility of state and local taxes (SALT) starting in 2018. Some of the states with the highest income taxes are California, New York, and New Jersey. With rates ranging from close to 9% up to over 13%, the inability to deduct these taxes strikes a huge financial blow to high-income individuals.
Here at Boca Expert Realty, we are experiencing an increase in people moving to our area, in order to avoid the new tax hit. I expect this to continue, especially next year when people realize the effect of not deducting their SALT taxes on their tax bill. The sales of $1,000,000 plus homes has escalated in our area, and predictions are that this trend will remain as more and more wealthy people are considering our state a tax a haven of sorts.
There is a series of steps that need to be followed in order to establish Florida residency for tax purposes. If you have a second home out of state, you need to file a Declaration of Domicile. Additionally, you must secure a driver’s license in Florida, and register to vote here. Be sure to file for Homestead Exemption from property taxes, which also helps save on property taxes. Depending on the state you are moving from, there may be additional scrutiny from your former state of residency. It is best to consult with your CPA and attorney before deciding to establish residency in Florida.
Read more about the influx of wealthy buyers here. For establishing residency in Florida, read here and here. And when you decide it’s time to explore making the move, contact us!