Considering Florida Residency?
It’s the time of year
snowbirds flock to Flori-
da seeking respite from
harsh winter weather.
Many will consider mak-
ing Florida their legal res-
idence. If you’re consid-
ering such a move, there
are a number of financial
and legal factors to con-
sider.
Perhaps the most-tout- Joseph S. Karp,
ed advantage of living here C.E.L.A.
is that Florida does not have a state
income tax. On the other hand, Flori-
da does have an intangible tax. An-
other advantage of Florida residency
involves property taxes. If you own
a home here and declare it as home-
stead, your property tax assessment
is automatically slashed by $25,000.
More importantly, your home’s as-
sessed value cannot increase more
than 3% annually.
There may be disadvantages in
leaving your home state, though. If
you sell your home there, you may
end up forfeiting certain tax advan-
tages you enjoyed there. The timing
of when you sell your home is also
important. Federal law provides a
$250,000 capital gains exclusion
($500,00 for a married couple) when
selling a home that has been your pri-
mary residence for two of the last five
years. Thus, if you relocate to Flori-
da (or any state for that matter), you
will need to sell the property in your
home state within three years of re-
locating in order to avoid paying more
in capital gains taxes than necessary.
Florida has no estate tax. This is
particularly advantageous if you come
from a place like New York or New
Jersey. Here’s why: although the fed-
eral estate tax exclusion is $2 million
for anything you leave to anyone oth-
er than your spouse, New
York imposes a tax on any-
thing over $1 million, and
New Jersey, on anything
over $675,000. These states
could impose state estate
tax even on the death of the
first spouse, despite the ex-
istence of a credit shelter
set up to shelter $2 million
for federal tax purposes.
For example, a New Jersey
resident who leaves $2 mil-
lion in a credit shelter trust for the
benefit of his spouse would have no
federal estate tax, but would have a
New Jersey estate tax on anything
over $1,325,000. Florida residency
would eliminate this problem.
So what does it mean to be a Flori-
da resident, and how do you prove
it? First, you must reside in Florida
for more than six months per year (al-
though the six months need not be
continuous). And you must do it, not
just say it. States have methods of
tracking where you reside, and if your
home state determines that you are
not a true Florida resident, it may
end up taxing you as if you still lived
there. You may also want to consid-
er doing a formal “declaration of domi-
cile” at the county property apprais-
er’s office, changing your driver’s li-
cense, registering to vote in Florida,
and officially changing your mailing
address.
Joseph S. Karp is a nationally certified
and Florida Bar-certified elder law attorney
(C.E.L.A.) specializing in the practice of Trusts,
Estates and Elder Law. His offices are locat-
ed at 2500 Quantum Lakes Drive, Boynton
Beach; 2875 PGA Blvd., Palm Beach Gar-
dens; and 1100 SW St. Lucie W. Blvd., Port
St. Lucie. Call him at 561-752-4550 (Boyn-
ton); 561-625-1100 (Palm Beach Gardens);
or 772-343-8411 (Port St. Lucie). Toll-free
from anywhere: 800-893-9911. E-mail: KLF@
Karplaw.com. or website www.karplaw.com