Pay high taxes where you are? Florida is ‘tax haven’ for luxury real estate
Article originally published in Media Group Lifestyle, by Randy Gilbert, JD. Used with Permission.
I always heard other states pay more taxes than Floridians, but I had no idea how much?!? State and Local Tax (SALT) deductions allow taxpayers of high-tax states to deduct local tax payments (e.g. property, income, and sales taxes) from their income on their federal tax returns. This deduction used to be unlimited. But starting in 2018’s tax year, the new Tax Cuts and Jobs Act, capped SALT deduction at only $10,000. So this is the first year to really “hit home.” The SALT cap really negatively impacted Florida’s luxury housing market sales.
But by the numbers, it still makes sense for out-of-towners to move to Florida. For ultra-wealthy residents in high-tax states, Florida is a tax-haven. Florida, has no state income tax. Conversely, residents of other states are forced to pay personal income tax, as much as: CA (13.3%), NJ (10.75%), NY (8.82%), CT (6.99%), and IL (4.95%); plus New York City charges an additional personal income tax. Effective July 1, 2019, New York also implemented a 1.25%-3.9% “mansion tax” payable by buyers on residential properties of $1,000,000 or more; which is in addition to Sellers paying a 0.4%-0.65% state “transfer tax,” plus 1.0%-1.425% NYC transfer tax.
On January 1, 2019, the Federal Estate Tax exemption increased to $11.4 million per individual, but some states still assess their own estate and inheritance taxes. These “death taxes” are charged in addition to any federal estate taxes that heirs will owe on assets you leave behind for them. Florida has no estate tax. But in 2019, estate taxes must be paid on assets over: CA ($0), NJ (repealed estate tax in 2018, but still has inheritance tax), NY ($11.4M), CT ($3.6M but in 2020 will go to $11.4M), and IL ($4M).
With all Florida has to offer, its tax savings could warrant buying a Florida luxury home.
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