Florida Snowbirds and Officially Relocating

Florida Snowbirds and Officially Relocating

Benefits of Becoming a Florida Resident.

Do you own a home in Florida? Have you ever considered becoming a Florida resident? Unlike other states, Florida has some attractive tax benefits that may help make that decision a little easier, such as:

• No income tax
• No state estate tax
• No inheritance tax
• No gift tax

Florida also offers its residents generous homestead protections, exemptions, and Save Our Homes (SOH) benefits. To take advantage of these benefits, you must be a Florida resident, which typically requires changing your domicile to Florida and severing ties with your current domicile—in this case, Pennsylvania.

How do I change my residency to Florida? Navigating domicile and tax obligations.

Understanding residency qualifications in both Florida and Pennsylvania is crucial, especially if you’re considering a move. Your tax obligations, for instance, depend on which state considers you a resident. In most cases, residency is determined by domicile, which is defined as the place an individual intends to make their permanent home and where they plan to return whenever they are absent. While you may have homes in more than one state, you can only have one domicile.

Because domicile is a question of intent, courts often look at your overall manner of living to determine whether a change has occurred. Specific actions that may demonstrate your intent to establish Florida as your domicile include:

• Owning a home in Florida
• Filing a Declaration of Domicile in your Florida county of residence
• Registering an automobile in Florida
• Obtaining a Florida driver’s license
• Registering to vote in Florida
• Applying for the Florida homestead exemption
• Working or transacting business in Florida
• Maintaining social memberships in Florida
• Updating estate planning documents to reflect Florida residency
• Enrolling children in Florida schools
• Paying Florida taxes, such as real estate taxes

By taking the steps outlined in the actions above, you can demonstrate your commitment to residing in Florida and establish your intent to make it your domicile.

With that being said, it is important to understand that you may still be considered a Pennsylvania resident, even if you are domiciled in another state. For example, if you maintain a permanent place of abode in Pennsylvania and spend more than 183 days in the state, you will be classified as a Pennsylvania resident and subject to Pennsylvania tax obligations, regardless of where your domicile is. Therefore, if you intend on traveling back and forth, it’s important to keep track of how much time you spend in Pennsylvania.

Understanding the residency and domicile requirements in both Florida and Pennsylvania is essential for properly managing your tax obligations and ensuring you meet legal requirements. Establishing Florida as your domicile involves taking specific actions to demonstrate your intent, but it’s important to be mindful of Pennsylvania’s rules, particularly if you maintain a permanent residence there. By carefully planning your transition and consulting with professionals, you can successfully navigate these complexities and avoid unexpected tax liabilities.

What is the homestead exemption and Save Our Homes?

If you intend to make Florida your residence, it’s important to take advantage of Florida’s favorable homestead laws. For your Florida home to qualify as your “homestead,” you must both own the home and use it as your permanent residence. If your home meets these requirements, three types of benefits and limitations will apply, relating to:

1. Real estate taxes
2. Creditor protection
3. Restrictions on transferring your homestead

Let’s take a closer look at the real estate tax benefits. It is important to apply for the homestead exemption and Save Our Homes (SOH) on your Florida homestead. The homestead exemption allows for reduction of up to $50,000 from the assessed value of your residence.

Once you have obtained the homestead exemption, SOH places a limitation of three percent (3%) on annual assessment increases on your homestead property. In other words, the SOH caps the increase in the assessed value of the homestead property for purposes of calculating the real estate tax that is owed in any given year. The assessed value will not increase more than three percent (3%) or the percentage change in Consumer Price Index (CPI): whichever is less. The average increase over the years has been around two percent (2%) per year. So, while market values on property may skyrocket, the SOH assessed value on your homestead for real estate tax purposes is limited by the cap.

Who is eligible for the homestead exemption and SOH?

To qualify for the homestead exemption and Save Our Homes (SOH) benefits on your Florida residence, you must be a permanent Florida resident as of January 1st of the year you wish to apply. You will need to provide proof of residency. The property appraiser’s office typically requires the following items:

1. Evidence of Ownership (deed, tax receipt, etc.)
2. Social Security Numbers for all Owners
3. Voter Registration (dated prior to January 1st)
4. Florida Driver’s License (dated prior to January 1st)
5. Florida Vehicle Registration (dated prior to January 1st)

If you own a residence in another state, you may also want to file a Declaration of Domicile with the Clerk of Courts and follow the steps outlined above to establish that you are a Florida resident and that your Florida residence is your primary home. You are only allowed to apply for a homestead exemption in one state. Therefore, your spouse cannot claim a homestead exemption in another state while you are homesteaded in Florida. Your spouse must relinquish any competing homestead exemption, if applicable.

When and where can I apply for homestead exemption and SOH?

New applications for the homestead exemption must be submitted by March 1st to the Property Appraiser’s office in the county where your residence is located. Some counties require in-person filing, while others allow you to mail your application or apply online. Be sure to check with your county’s property appraiser for specific requirements.

Don’t pack your bags and move to Florida just yet. Changing your residency involves many complexities, as well as understanding the benefits and limitations of Florida’s unique homestead laws. Before making the change, it’s essential to consult with your tax advisor and an attorney who is licensed and has practiced in Florida to discuss the proper timing of your residency change.

Pittsburgh Real Estate Attorneys

If you would like more information on the tax benefits of relocating to Florida or have questions about change of domicile to Florida, contact Dan Lynch at (724) 776-8000 or dlynch@lynchlaw-group.com.