A major contributor to the influx of people moving to Florida is the recent change made to the tax plan. Many people utilize the state and local tax (SALT) deduction. However, with the recent institution of the Tax Cuts and Jobs Act (TCJA), those living in high-tax states are now looking to move elsewhere – specifically, Florida.
When it comes to federal tax returns, taxpayers can choose to either accept the standard deduction or itemize their deductions. Those who choose to itemize their deductions are taking utilizing what is called the SALT deduction. The SALT deduction allows taxpayers to deduct local tax payments on their federal tax returns. Deductions can include property, income, and state taxes. Depending on where you live, it will be in your best interest to deduct one instead of another. In general, the deduction will usually be that which is paid into the most. For example, those living in expensive houses in thriving communities will most likely choose to deduct their property tax. Since that is the one to which they pay the most, they will receive the most back from it. Similarly, those who have high incomes will most likely choose to deduct their state and local income taxes.
One of the largest changes made in the last 30 years to the taxation process in the United States was put into action in 2017. The TCJA instituted a cap of $10,000 on SALT deductions. This new act negatively impacts those living in high-tax states and those who have higher incomes. These people are paying more in taxes and therefore, through the SALT deduction, were seeing a certain amount returned to them. However, since the institution of the TCJA, they can no longer receive any more than $10,000.
Florida Real Estate
People are moving to Florida from all over. However, people from states with the highest taxes, such as New York, Massachusetts, Connecticut, Virginia, Illinois, and California, are moving down in droves. Florida is among the top choices for those fleeing from higher tax bills. The Florida homestead exemption is just one of the many ways that homeowners in Florida can receive tax breaks, making it a desirable place to relocate.
Not only is Florida a great place to live with its warm weather and sunny beaches, but it also offers a refuge for those looking to move elsewhere due to the tax reform. If you are looking to buy or sell a home in Florida, reach out to see how we can help!