Why Is Everyone Moving to Florida?
Every year thousands of people decide to make Florida their new home, and it is not only the warm weather that is drawing them down south. Moving to Florida is not always about sunny beaches and visiting Disney World.
Some of the top reasons people move to Florida have to do with certain financial considerations.
1. There is No State Income Tax. The Florida Constitution prohibits state personal income tax, which can result in significant savings, especially for high-income individuals. Florida’s constitution also prohibits Florida municipalities and counties from levying a personal income tax. No income tax means that residents do not have to pay tax on both earned income, like wages, and unearned income, like retirement benefits, interest, and dividends. Florida is one of only nine states without an income tax.
2. There is No Estate or Inheritance Tax. In addition to no income tax, Florida does not have an estate or inheritance tax. This means that the beneficiary of an estate does not owe the state any tax on their inheritance. The savings for your estate can be drastic, especially compared to states like Washington and Hawaii, which have a top estate tax rate of twenty percent.
It is important to note that your estate could still owe federal estate tax if its value is over $12.92 million.
3. There is a Homestead Property Tax Exemption. Florida gives a Homestead Property Tax Exemption to its residents that can decrease the taxable value of an individual’s permanent residence by up to $50,000. Under the law, homestead properties are assessed at a reduced value, thereby lowering property taxes.
Additionally, the Florida Save Our Homes Law limits annual increases in assessed values of homestead property to three percent or the percentage change in the Consumer Price Index, whichever is lower. This rule guarantees that even if real estate prices rapidly increase, your property taxes will not dramatically rise.
4. There are Asset Protection Benefits. Florida has strong asset protection laws. For example, primary residences are protected from creditors. A Florida homestead cannot be attached for forced sale by general creditors (federal and local governments, mortgage holders, and creditors who provided services to the homestead can still attach liens). In addition, Florida offers asset protection for property held as tenants by the entirety, many retirement plans, 529 education accounts, and life insurance proceeds.
5. Florida is Business Friendly. Florida has a business-friendly environment. It has no payroll taxes and only a 5.5% corporate income tax rate. Furthermore, the state has significant investment capital from venture capitalists and angel investors.
How Do You Become a Florida Resident?
You must be a legal resident to take advantage of the benefits listed above. You must prove that Florida is your primary and permanent residence through the totality of your conduct. Establishing residency can seem complicated, especially if you also spend time or have another home in another state. However, many of what we in Florida call “snowbirds” are in fact, Florida residents who have retired to Florida and successfully established themselves as Florida residents.
Examples of conduct that may prove Florida residency include:
• Spending the majority of your time in Florida;
• Filing a Declaration of Domicile with the court (not required);
• Owning or renting a home in Florida;
• Getting a Florida driver’s license;
• Filing tax returns with Florida as your resident state;
• Opening bank accounts in Florida;
• Updating estate planning documents to comply with Florida’s laws.
Call A Naples Estate Planning Lawyer
If you have questions about moving to Florida and establishing Florida residency, you should contact us in Naples. James R. Nici is an experienced Naples based attorney with over 25 years of experience in Florida domicile, estate planning, asset protection, and more. Contact our office today at (239) 449-6150 or use our web form to set up a free consultation.