The latest tax reforms make Florida a haven for homeowners in high-cost states
If there’s one thing the Suburban Jungle markets tend to have in common it’s higher than average property taxes. In the NYC, LA, San Francisco, and Chicago suburbs, it’s not uncommon for state income taxes to be well into the double-digits—upwards of 13% or more.
While, in the past, state income or sales tax could be itemized and written off, the latest tax reforms cap state and local taxes at $10,000. That number includes property taxes which, in these markets, can easily top $20,000, $30,000, $50,000 or, in some cases, be well into the six-figures.
The end result? In some markets, home prices are cooling, making properties more affordable—however, homebuyers still have to contend with the hefty taxes and sub-par write-off opportunities. While many are making it work using discounted purchase prices to offset property taxes, others are taking another step—they’re heading to South Florida and establishing residency here.
Florida has no state income tax, immediately driving its affordability up versus more costly states. For higher-income buyers this can mean savings of tens of thousands or even more come April 15—and that, for these buyers, is enough to make the big move.
The Florida market—especially in southern Florida—is already seeing the impact. Between January and June sales of seven-figure homes was up 25% year-over-year, even though luxury property values shot up double-digits.
While some of this movement is being driven by Boomers making their retirement moves earlier, there are lots of city and suburban families heading south as well. By establishing Florida residency—which requires spending at least 183 days per year in the state—people can reduce their tax burden immediately. For starters, that Florida resident would pay Florida taxes on their income, regardless of where it’s earned. On a $750,000 annual income, that Florida resident would likely net at least 11% more per year over a New Yorker’s take-home pay and upwards of 20% more than a California resident.
As we inch closer to Tax Day 2019, many experts predict this trend will only continue—and it will continue even more into the new year and beyond if tax reforms remain as-is in high-tax markets.
Whether South Florida or ANY of the suburbs are in your future, Suburban Jungle can help. Get in touch and our expert Strategist will help find the right suburb with the right taxes for your family.