Florida, with its well-deserved nickname, the Sunshine State, is not only known for its pristine beaches, vibrant culture, and warm weather, but also for its friendly tax laws and financial advantages. Establishing residency in Florida can be a wise decision for many—even if you want to keep one foot in the snow and one in the sand. However, the transition can be smoother and more beneficial with the guidance of a local financial advisor who understands the state’s unique financial landscape and residency requirements.
It’s one thing to become a well-known face at your favorite new beachside seafood restaurant or golf club. It’s a whole other thing to prove to your tax folks up north that you’ve truly found a home in Florida and can say good-bye to tax obligations elsewhere.
The Path to Florida Residency
Establishing residency in Florida is actually a fairly straightforward process, but it does require a careful and well-documented approach.1 The primary steps include filing a Declaration of Domicile, obtaining a Florida driver’s license, and registering to vote in the state. It’s also advisable to update your estate planning documents to reflect Florida law—and especially important to start spending the majority of the year in Florida. These steps are important as your goal is to document your intent to make Florida your permanent residence.
Advantage: Florida
Your quest for Florida residency, if successful, will yield several tangible benefits even beyond getting plenty of vitamin D through lots of sunny days. Here is a shortlist of reasons why checking all the boxes should be well worth the effort:
Tax Advantages: One of the most enticing benefits of Florida residency is the absence of state income tax. This is a significant financial advantage that can potentially save you thousands of dollars annually.
Florida does not impose an estate tax or an inheritance tax, either. Without the requirement to pay these taxes, estate planning and legacy considerations can be made without certain uncertainties such as taxation rates. With the help of your financial advisor, perhaps you can focus a bit more on spending wisely—and enjoyably—during retirement.
Asset Protection: Florida also has favorable asset protection laws that can be beneficial in safeguarding your financial assets. For instance, the state offers robust homestead exemption laws.2 These laws can provide a solid foundation for preserving your wealth for the long-term.
Cost of Living: Depending on the region and city, the cost of living in Florida is relatively low compared to places in many other states. Housing, groceries, and transportation tend to be more affordable, which can translate to more disposable income and savings. If you find that the overall cost of living is lower where you’ll be living in Florida, economic advantage could significantly impact your financial scenario over the years.
For instance, the cost of living is 17.85% lower in Sarasota than in Stamford, Connecticut. In another example, it’s 11.73% lower in Sarasota compared to Bergen-Passaic, New Jersey.3 Of course, the real estate on the keys and other highly desirable neighborhoods in Sarasota may be considerably more expensive than in several areas in the Northeast or Midwest.
Spend Time in Florida
Yes, the word is out. Instead of shoveling snow and scraping windshields, Florida has a few sunny options for spending your time. You simply need to spend at least six months and a day in Florida to check off the “time spent” requirement for residency. In other words, you’ll need to be in Florida for a minimum of 183 days.
Your Local Florida Guide
Transitioning to a new state’s financial landscape can be daunting. A Florida-based financial advisor can provide much-needed guidance in navigating the state’s tax laws, asset protection statutes, and investment opportunities. Their local expertise can help in tailoring a financial plan that maximizes the benefits of Florida residency, ensuring a smooth transition. They can also leverage their professional network to help you connect with tax professionals, for example, who can assist with additional questions or details.
Just One More Thing
For those who remember Columbo, the persistent and somehow always successful TV detective, a “just one more thing” question shouldn’t surprise you. Do you need to own a house in Florida to establish residency? The answer is no—renting a condo or other type of rental property will qualify as well. But you will still need to fulfill all the other requirements as you would with a house. Remember, you’re not proving that you own a residence in Florida; you’re proving that you will be a Florida resident.
The Takeaway
The journey to establishing yourself as a legal Florida resident will likely take a year or more, but the payoff of taxation and other benefits will last a lifetime. We have only outlined the process here. It clearly requires careful planning and informed decisions. Eventually, you may want to connect with a Florida tax professional and perhaps even an attorney. As an early step, we hope you’ll consider talking with a local Florida financial advisor. They can you get started in the process and connect you with additional experts as needed. By the way, welcome to Florida!
Sources:
1 https://dos.fl.gov/library-archives/research/florida-information/new-residents/residency-requirements/
2 https://floridarevenue.com/property/Pages/Taxpayers_Exemptions.aspx
3 https://www.bankrate.com/real-estate/cost-of-living-calculator/
Disclosure: This information is for educational and informative purposes and shall not be considered a specific recommendation. Readers are advised to speak with their advisor at JL Bainbridge to determine their specific recommendations that meet their investment objectives and to review their portfolios. The material being provided is thought to be accurate. However, the information is compiled from multiple resources and may become outdated or otherwise rendered incorrect by new research or corrections without notice. J.L. Bainbridge & Co., Inc., is not a broker dealer and does not offer tax or legal advice. Please consult your tax or legal advisor for assistance regarding your individual situation. It should neither be assumed that future results will be as profitable or that a loss could not be incurred. For more information related to our firm, please see our disclosure brochures at jlbainbridge.com and https://adviserinfo.sec.gov/firm/summary/108058.
