Faced with higher liabilities from the 2017 federal tax overhaul, northerners are attracted to Florida because the state has no personal income tax requirement. The South Florida Sun Sentinel reported on how high earners from the New York area are moving to the Sunshine State and signing real estate contracts. At Conroy, Conroy & Durant, P.A., we facilitate the processing of Collier County residential real estate transactions, from the initial preparation stage to a successful closing.
The 2017 tax overhaul eliminated a homeowner’s ability to deduct state, city and property taxes from their federal income tax return. This effects high-earners in Connecticut, New Jersey and New York, who own some of the most expensive real estate in the nation. To reduce their liabilities, northeasterners are reportedly seeking housing in areas that are low in cost, maintenance and property taxes.
Escaping New York City’s mansion tax
New Yorkers may be actively seeking low-maintenance property in Florida because of the increase in the Empire State’s “mansion tax.” Passed in 1989, the mansion tax was originally designed to increase the state’s revenue during a period of economic recession. Buyers of properties that cost $1 million or more pay an additional tax of 1%.
In July of 2019, the mansion tax increased for buyers of property in New York City, with the intention of improving the city’s crumbling subway system. The Big Apple’s new mansion tax rate is 1.25% for properties that cost $2 million or more, with a 3.90% cap on properties that cost upwards of $25,000,000. Some high-income residents who resent this additional tax might prefer alternative housing options in a low-tax state such as Florida.
Our page on residential real estate provides more information on what to expect during the transaction process.