Florida is one of the few states that does not have a personal income tax. Although the state taxes business corporations, there is also an exemption for sole proprietorships, partnerships, and certain types of organizations.
This means you can save money on your Florida real estate investment if you act on behalf of such organizations.
For those planning to purchase a rental home, the lack of income and corporate taxes makes Florida an even more attractive destination. Combined with high demand and a healthy long and short term rental market, investing in local real estate can be very profitable. In the US market, rents increase on average only 3-5% per year. Florida is doing much better, with some areas of the state seeing rent prices increase by 18.81% compared to last year.
As a Florida homeowner, you may also be able to reclaim the following property-related assessments on your tax return:
- mortgage insurance premiums;
- mortgage interest;
- property taxes;
- Loan closing costs and loan origination fees.
Another Florida tax benefit is that the state does not levy estate taxes. Thus, anything that was bequeathed to an individual will not be subject to the mandatory fee.
There are also property tax benefits associated with declaring the property your primary home or the only home of one of your dependents, which can reduce the property’s taxable value by up to $50,000. The state has a Save Our Homes (SOH) program that provides tax relief. The SOH program limits annual assessed value increases to 3%.
