Homesteading in Florida

[Bluwtrguy]

Retired earlier this year and bought a home in Florida to use about 6 months of the year to escape winter. Has anyone done this and claimed the homestead exemption for Florida while keeping their current home in another state? I assume I would lose the homestead exemption I currently have on the property up north.

The state up north has a state income tax and Florida does not. If I homestead in Florida, would I still be required to pay income taxes prorated for the time spent up north?

Curious if others have done this and if there are any issues or items to consider. Seems like if I am going to split my time, I should homestead in the state with the more favorable tax situation. Any info from your experiences would be appreciated, thanks.

 

[imoldernu]

Can't speak for the status today, but when we did the 6 & 6 between Illiniois and Florida up until 2012, Florida never questioned anything... taxes, legal residence, car licenses, or anything else that caused us to make a differentiation.

We didn't try to take a homestead exemption or tax freeze in Fl. We treated it as being on a 6 month vacation. We had and have both, here in Illinois.

Hmmm... maybe because we lived in a manufactured home in an over 55 development. We did own our home, and paid the equivalent of a vehicle tax, and rented the land from the Senior Park.

I guess we figured, if it wasn't broke, we wouldn't try to fix it.

 

[Amethyst]

When we applied for Florida homestead, we were told that the Tax Assessor's office does check to see if you are homesteaded in another state. We were, in fact, homesteaded in MD, and had to show proof that we had sold that house.
Thanks for reminding me to check with them to see if we've been approved for 2020 homestead. We've now lived in Florida a full six months.

Retired earlier this year and bought a home in Florida to use about 6 months of the year to escape winter. Has anyone done this and claimed the homestead exemption for Florida while keeping their current home in another state? I assume I would lose the homestead exemption I currently have on the property up north.

The state up north has a state income tax and Florida does not. If I homestead in Florida, would I still be required to pay income taxes prorated for the time spent up north?

Curious if others have done this and if there are any issues or items to consider. Seems like if I am going to split my time, I should homestead in the state with the more favorable tax situation. Any info from your experiences would be appreciated, thanks.

 

[Sunset]

OP - You will need to be able to prove you lived over 6 months (183 days) in FL.
When in FL use your credit card to pay for everything, and keep receipts, they show you were there. Cash does not.

Also of course open FL bank accounts, move brokerage to a local office in FL if that is the type you use, change addresses on everything, get a FL license, let your Northern license expire or return it.

You can keep your Northern home, but you have to show you are actually living in FL, and not simply a winter escape (like in your post). Think of it as a Summer escape from FL heat.

Of course if you rented out your Northern home, that would strongly help.

Are you sure you want own 2 homes ? It's quite a haul moving the stuff you need twice a year to each home.

 

[pb4uski]

Retired earlier this year and bought a home in Florida to use about 6 months of the year to escape winter. Has anyone done this and claimed the homestead exemption for Florida while keeping their current home in another state? I assume I would lose the homestead exemption I currently have on the property up north.

The state up north has a state income tax and Florida does not. If I homestead in Florida, would I still be required to pay income taxes prorated for the time spent up north?

Curious if others have done this and if there are any issues or items to consider. Seems like if I am going to split my time, I should homestead in the state with the more favorable tax situation. Any info from your experiences would be appreciated, thanks.

We will be changing domicile in 2020 so are in the planning stages. In 2020 we will get Florida driver's licenses, register to vote in Florida, regisr one of our two vehicles in Florida, change our addresses of record for most things to Florida (will leave for things associated with out Vermont property and vehicle we will leave up there to use during the summer), will disclaim our Vermont residency and homestead exemption and claim reidency and homestead exemption in Florida, etc. Will also keep good track of where we spend our time outside of Vermont to have good records that we are not Vermont residents.

For us, homesteading benefits are roughly a wash, auto insurance is about $1,000/year more and tax benefits exceed the increased auto insurance by some.... net benefit is substantial enough to not be chump change, but is not substantial enough to be life changing.

If you become a Florida resident... or more importantly are not a resident in your current state... you will not be required to pay state income taxes unless you have income producing property in that state. For example, my Mom lives in a no-tax state but has a rental property in Vermont and pays Vermont state income tax on that income.

 

[MichaelB]

Establishing state residency in Florida is simple and straightforward. The challenge is establishing “non-residency” in the current state. Because state tax laws and residency considerations differ, there’s no single way to do this.

Releasing the homestead exemption in the current state is a must-do. Even if the new state doesn’t check, the old state can use the homestead declaration to prove one still is a resident and subject to state income tax.

 

[pb4uski]

.... Releasing the homestead exemption in the current state is a must-do. Even if the new state doesn’t check, the old state can use the homestead declaration to prove one still is a resident and subject to state income tax.

In Vermont, all property is nonhomestead unless it is declared as homestead... there is an annual homestead declaration that is a separate form that is filed along with your tax return (or can be filed separately for those who do not need to file a tax return).... it is based on whether not you own and occupy a homestead as your domicile on April 1... so all I have to do is not file the form and the Vermont homestead exemption is automatically released.

 

[Bluwtrguy]

Thanks everyone. Spoke to someone in Sarasota County late yesterday. Sounds like I would need to declare Florida as my homestead by January 1 to get the exemption for next year. Sounds easy, change driver license, vehicle registration and voting registration to Florida. She said there was no requirement for staying a certain length of time as far as Florida was concerned. She said bring proof of above and proof of Florida ownership as of January 1, before the end of March, and I could homestead starting 2020.

Sounds like I need to call current county offices in Michigan, and probably an attorney, to understand all the requirements of revoking homestead on house here.

Yes, having 2 places makes me nervous, but we planned for this, and we can always adjust if required in the future. We are super excited to miss winter for the first time in our lives. Thanks everyone for your responses.

 

[Amethyst]

Just re-read OP's question, and realized that it mentioned taxes. Check with your home state tax adviser. We will be paying pro-rated MD state/county income taxes for 2019; we have already paid them ahead of time. It's very nice to get our pensions, now, without that large bite taken out.

 

[BoodaGazelle]

Some states are more strict than others... we became FL residents and kept a 2nd home in RI.... but one difference is that we were never full-time residents in RI... but friends from there have told us they were very strict about catching people who were trying to avoid RI taxes by declaring FL residency.

 

[pb4uski]

^^^ Yes, as Michael mentioned... becoming a Florida resident is the easy part... becoming a non-resident of the state that has a state income tax is the hard part... they will try their best to frame an argument that you are still a resident to keep collecting those tax $$$ so you need to dot your i's and cross your t's to make sure that you have a solid case that you are no longer a resident but just spend some time at your property there.

This is understandable because there are some taxpayers who change residency to a no tax state in form only... they still try to take advantage of the benefits of their old state by buying a resident hunting or fishing license, trying to retain their homestead exemption or trying to double-dip on the homestead exemption and other foolish manuevers and IMO those people deserve to get caught and taxed.

 

[ShokWaveRider]

We had no issues when we came to Florida from SoCAL. Sold our family home in CA, lived in Caribbean for 3 Winters and in Canada with family for summers for 3 years. We set up a Florida domicile with a Cruisers address/mail service, and got a Fla Drivers License. Filed Florida Taxes for 3 years with investment income as our only income. Moved to Fla permanently and rented for another 3 years after returning from the Caribbean. Purchased a home after that in Fla. Never are peep from California revenue departments.

 

[pb4uski]

^^^ I think it becomes harder for those of us who keep a home in our old state and still spend time there.... in your case you just moved out when you sold your SoCal home.

 

[ShokWaveRider]

^^^ I think it becomes harder for those of us who keep a home in our old state and still spend time there.... in your case you just moved out when you sold your SoCal home.

True. However, we do have friends who left with us (to go sailing) that did the same and then returned to CA and purchased another home, but live in another state. We have lost touch a little but they live full time in Nevada as NV residents, they were never contacted by CA Revenue agencies, at the time. If I remember correctly they initially rented their home in CA to family (Their Children).

 

[MichaelB]

Sounds like I need to call current county offices in Michigan, and probably an attorney, to understand all the requirements of revoking homestead on house here.

Revoking your property homestead exemption should be simple, and you likely don’t need an attorney. Your property appraiser should have the details, probably just fill out a form and submit. It would be a good idea to keep a copy and get a signed receipt, as there may be some delay when you register your new homestead exemption in Fl.

Income taxes in your current home state are difficult. Each state has its own tax regulations, so you need to determine how your state taxes part year residents. The timing of income you receive can be critically important, so this is something you’ll want to start looking into soon.