| If you decide to relocate to Florida, you'll have property | | | | has been an interesting change in the IRS laws |
| taxes just as in any other state. The good news is | | | | regarding 1031 exchanges, more commonly referred to |
| that Florida property taxes are very reasonable. The | | | | as the 'swapping' of investment property. Under the |
| median home value in Florida is $189,500. The average | | | | IRS laws, an investment or business property can be |
| property tax is $1,495, which means Florida has the | | | | sold and the proceeds will be tax-free if they are |
| 22nd highest average tax amount in a comparison of | | | | reinvested in a 'like-kind' property. However, this meant |
| all 50 states. As a percentage of a home's value, | | | | that homeowners were not allowed to use their own |
| Florida property taxes are approximately .79% of the | | | | property as a vacation home without risking that it |
| home's value (28th highest out of 50). | | | | would be considered 'mixed-use' (taxable) rather than |
| Florida property taxes as a percentage of a person's | | | | an investment property. |
| income are slightly higher, measuring an average of | | | | With the changes in the law, there is now a 'safe |
| 2.95% and putting Florida at the 19th highest position in | | | | harbor' for these sales that so that you can enjoy your |
| this measurement. So from these statistics, you will | | | | vacation home in Florida and eventually sell it at a |
| likely find that the dollar amount of your Florida | | | | higher value, then roll the proceeds into another home |
| property taxes and the percentage of your home's | | | | in a tax-deferred sale. The advantage is two-fold; you |
| value that the taxes represent will be similar to or | | | | get to rent the home for the majority of the year, |
| lower than what you pay now. However, if you were | | | | earning income to pay the mortgage. And you get to |
| earning a salary in Florida, you'd find your property | | | | enjoy the home yourself without losing your earnings |
| taxes might represent a higher percentage of your | | | | to taxation at the time of sale. In order to avoid |
| annual income than you were paying in your old state. | | | | taxation on the gains as personal income, you need to |
| However, there are two strategies you can use to | | | | do the following: |
| reduce the amount of tax that you will have to pay. | | | | · Purchase the home and keep it for a |
| One will reduce your annual property tax, and one will | | | | minimum of 24 months |
| allow you to reduce the tax you will pay on the sale of | | | | · For each of the 12 month periods you own it, |
| your home. Unfortunately, only one or the other will | | | | you must rent it out for at least 14 days of the year at |
| apply at the same time. | | | | market value |
| First, there is the Florida homestead exemption that is | | | | · Stay in it yourself no more than 14 days or |
| applied to a home that is your permanent and full-time | | | | 10% of the time you rented it out, whichever is greater. |
| residence. In other words, it's not just your vacation | | | | Remember to always consult your accountant or tax |
| home. | | | | attorney before making a 1031 exchange. The rules |
| If you do have a vacation home in Florida, you will | | | | can change quickly, and you don't want to act under a |
| have to pay full Florida property taxes. However, there | | | | false assumption. |