What draws New Englanders to relocate to Florida? Warmer weather and reduced taxes.
Florida is one of the few states with no income taxes. How do you become a Florida resident to ensure you can stop paying taxes in your previous state of residence?
Suggested ways to establish residency in another state:
• Purchase or rent a home that you live in full time (183 days for income tax purposes)
• Change your driver’s license or ID card to the new state
• Register your car in the new state
• Register to vote in the new state
• File a change of address form with the IRS (form 8822)
• Fill out a change of address form and mail forwarding with the US Postal Service
• File a declaration of domicile
• Find employment
• Proof of termination of residency in your old state
These are examples of items that will prove residency, but there are other ways not included above. Completing all of the above is not required to prove residency but the more you can check off, the harder it will be for your previous state of residence to tax your income. Although, if you own rental property or business interests in your previous state, that state still has the right to tax that income as a nonresident taxpayer.
Florida also has the homestead exemption on real estate. This exemption can lower your property value by up to $50,000 reducing your real estate taxes for the year. Be wary when purchasing a new home, the taxes paid by the previous owner will be lower than your new assessment will be. The Homestead Exemption and the Save Our Homes Benefit are granted to and follow individuals. You will need to apply for both, and they do not become effective immediately. Make sure to research with the assessor to understand the taxes you will be paying until your exemption is approved.
The state of Florida does not charge property taxes on motor vehicles. At initial purchase of a vehicle, Florida will collect a sales tax amount of 6%, but aside from sales tax Florida is one of few states to not collect annual property tax on vehicles.
In-state tuition rates are available to students who are Florida residents. The difference in proving residence for tuition purposes is you must be a resident for a full year before you are eligible for the reduced tuition. For a student who is a dependent, the parents need to be residents along with the child for the full year.
If you are considering relocating to Florida, please get in touch with us. The Innovative CPA Group provides services, solutions, and guidance based on our real-world experience in the real estate industry. Please contact us by visiting our contact page or via our contact form.