Establishing Florida Residency provides significant advantages for many Jupiter Bay homeowners.
Florida is often thought of as a tax haven due to its: lack of a Personal Income Tax, Inheritance Tax and Gift Tax. It has a 6.0% Sales Tax (which increases to 7.0% with Palm Beach County's 1.0% Sales Tax), and in 2007 the state mostly eliminated its Intangible Tax. However, Florida has one of the most inequitable property tax systems in the nation. This is due to the "Save Our Homes" cap on Florida property taxes which went into effect in 1995. The cap limits the increase in the annual assessment of property taxes for Florida residents (homesteaded properties) to 3% or the Consumer Price Index, whichever is less.
This cap, plus the rapid ramp-up of real estate prices from 2000 through 2006, resulted in property taxes for second home (non-homesteaded) owners rising 150% while Florida residents experienced a 3% (or less) rise each year. Some of this increase was mitigated by the subsequent "correction" in real estate prices since 2006, but recently we're seeing another significant increase in market values.
The advantages of Florida residency increased further in 2008 when Florida legislators passed Amendment 1 which makes a homeowner's total savings from the Save Our Homes cap portable. With this amendment the total savings produced by the cap on the homesteaded property are transferable to another homesteaded property anywhere in Florida.
Consequently, it pays more now than ever to consider becoming a Florida resident.
Establishing Florida Residency
As reported above, there may be good reasons for establishing Florida residency, where your second home/condo is located.
Following are the steps that you should take in establishing Florida residency:
- Rent or purchase a home/condo in Florida, that you consider your primary residence. If you own a home in another state, you must own (not rent) your Florida home/condo in order to declare residency.
- Live in Florida for 6 months and one day. Leave and return to Florida when vacationing elsewhere to claim days-in-state credit.
- File a Declaration of Domicile in Palm Beach County.
- Apply for a Residency/Homestead Exemption.
- Declare in your Will, Codicil or Trust that you are a resident of Florida.
- Register to vote in Florida as soon as you are eligible, and vote in Florida.
- Attend jury duty in Florida if/when asked.
- Transfer all bank accounts, brokerage accounts, safe deposit boxes and securities to financial institutions within Florida.
- Register your automobiles and boats, if applicable, in Florida and obtain a Florida drivers license. You must relinquish your prior license.
- File your Federal income tax return with the IRS using your new address and Florida's IRS filing address.
- State that you are a resident of Florida in all transactions, business and charitable.
- Use your Florida address on all registrations and correspondence.
- Change the address on all your credit cards and insurance policies.
- Establish church membership in Florida. Change social, religious and other national organization memberships.
- Obtain a telephone listing in Florida and use this as your primary phone. Consider removing any phone directory listings from other states.
- Keep as many of your primary records, personal photos, and valued possessions as possible in Florida.
- Remove any residency property tax discounts from your prior state of residency, and cancel your prior voting registration.
Property Tax Calculation
Once you've established Florida residency, you need to understand how your tax is calculated. Here's the terminology and calculations that are used:
- Market Value - The property appraiser's official estimate based on comparable sales in your neighborhood.
- Assessed Value - Based on your first year's market value plus any applicable assessment cap for each year since. The Save Our Homes cap is applied to homesteaded properties and is the lesser of 3 percent or the increase in the consumer price index (CPI-U), which was 2.3% in 2019 and 1.4% in 2020. Non-homesteaded properties have a 10 percent cap.
- Taxable Value - Assessed value minus any applicable exemptions, such as the homestead, agricultural or veterans exemptions.
- Property Tax = (Taxable Value divided by 1,000) multiplied by Tax Rate.
Every person who owns and resides on real property in Florida on January 1 and makes the property his or her permanent residence is eligible to receive a homestead exemption up to $50,000. The first $25,000 applies to all property taxes, including school district taxes. The additional exemption up to $25,000, applies to the assessed value between $50,000 and $75,000 and only to non-school taxes.
You can rent your property only if you occupied it on January 1st of the year, and the rental does not span two consecutive years.
Property Tax Schedule
Here's the annual schedule for the notification and collection of Palm Beach County's Property Tax:
- January 1 - Date of assessment. You must be a Florida resident by this date in order to begin receiving a homestead exemption on your property taxes.
- March 1 - Deadline for applying for a homestead exemption.
- June to July - Period of time to appeal a denial of exemption.
- August - Property Appraiser's office mails preliminary tax notices to property owners.
- September - Local governments and taxing agencies are each required to hold public hearings on their proposed tax rates and budget plans.
- November - Tax Collector's office mails tax bills to property owners and begins collecting payments.
- November to February 28th - Early payment discounts (4% to 1%) on property tax.
- 4% in November
- 3% in December
- 2% in January
- 1% in February
- March - Property tax due (full amount with no discounts).
- April 1st - Property taxes are delinquent.