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Will Power
Craig R. Hersch
Florida Bar Board Certified Wills, Trusts & Estates Attorney; CPA

Advantages to Florida Residency

I am often asked to opine whether an individual is better off remaining a resident of his or her northern state as opposed to claiming Florida residency. Judging by the amount of seminars touting the benefits of Florida residency in the Sunday paper, it appears that many are interested in this subject. So allow me to save you the time of sitting through a seminar (unless, of course, you are hungry for free donuts and coffee), and relay the reasons one might consider Florida residency here.

First and foremost, especially for those owning a residential property on the barrier islands, the Florida homestead and Save Our Homes property tax assessment cap can save a Florida resident thousands of dollars annually. Our local property tax appraiser, Kenneth M. Wilkinson, C.F.A, pushed through the Save Our Homes amendment statewide which provides that so long as you claim and then remain a Florida resident, your homestead property cannot increase in its taxable appraised value more than three percent annually. As recent annual double digit valuation increases would otherwise cause concurrent increases in your Sanibel/Captiva residence’s property tax, you should start with the question, “why not become a Florida resident?” For more information on Florida homestead and the Save Our Homes amendment, visit the Lee County Property Tax Appraiser’s office website, www.leepa.org.

Second, Florida does not have a state income tax. Again, depending upon the amount of an individual’s unearned income, becoming a Florida resident might save you thousands of dollars annually. Keep in mind that income that is earned elsewhere (occupational earnings for example) or which might be passive but earned in a state that imposes income tax, (rental income for commercial real estate located in a northern state) would continue to be subject to that state’s income tax.

Third, Florida does not have an estate tax. Many northern states, in an effort to balance their budgets have actually increased their state death taxes. New York, for example, taxes estates at a threshold lower than the federal level. Without proper estate planning, this could lead to state death tax upon the first spouse’s death. Florida residents typically don’t share those concerns (unless they own property in a state that imposes a state death tax).

Fourth, Florida’s intangible tax has been decreasing at a rapid pace, and may be eliminated entirely by January 1, 2007. A bill before the Florida House of Representatives proposes the abolishment of the intangible tax, which to most is nothing more than a “nuisance tax” anyway. For married couples, in order to pay the tax you must have more than $500,000 of assets subject to the tax (stocks, bonds and mutual funds outside of retirement accounts are the most common assets taxed), and the rate is low, $0.50 per thousand. In other words, if a married couple owned $1 million of intangible assets subject to the tax, the amount of annual personal intangible property tax due approximates $250. For more information on the Florida intangible tax visit the Florida Department of Revenue website at http://www.myflorida.com/dor/taxes/ippt.html.

Fifth, Florida is one of the most progressive states when it comes to our laws regarding estate and asset protection planning. Florida law is at the vanguard, and our laws continue to improve for our residents. For those who are or used to be engaged in high risk occupations, or for those who have accumulated substantial estates, it makes a whole lot of sense to consider Florida residency.

If you would like my primer on how to become a Florida resident, email me at hersch@sbshlaw.com . My office will forward a short synopsis to you.

©2005 Craig R. Hersch. Craig can be reached at hersch@sbshlaw.com

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