Property taxes in Florida: what things should an investor bear in mind?

Property taxes in Florida: what things should an investor bear in mind?

Florida is one of the US states that investors find most appealing, influencing both foreigners and Americans. The truth is that there are minimal taxes and the absence of income tax. Six more states in America have the same policy (Alaska, Nevada, South Dakota, Tennessee, Washington, and Wyoming). Tax is not taken from salaries or any other form of income. Florida is a well-liked destination for settling down permanently due to its excellent quality of living, alluring location, and pleasant environment.


Comparing Florida with other states

It’s crucial to consider several factors before deciding where to relocate permanently. One of the most important factors is the tax system as it differs from state to state in the US and depends on numerous aspects.

Any residential property in the US has a yearly property tax that the homeowner is responsible for paying. It makes up 1% to 2% of the ownership cost. In this perspective, New Jersey, Illinois, New Hampshire, and Wisconsin are the most expensive states. The owner of this average-priced home pays $ 2,000–$ 4,000 annually for it. Other "leaders" in price are Texas, Connecticut, Nebraska, Michigan, Vermont, and Rhode Island.

Tax revenue is used to create the budget, paying for the work of rescue workers, police, firefighters, and medical services. In addition, each American city has a drastically different annual contribution. If it is 11% in New York, then it is 3% in Las Vegas and 1% in Florida. The tax rate is influenced more by a region's reputation than by the state itself. Moving to an easier location can often be enough to cut your expenses. Interest and a fine are applied as punishment for tax evasion.

Property taxes in Florida: what things should an investor bear in mind?

Florida real estate tax

According to statistics, 20% of the average household's annual income of $50,000 in a sunny state goes to the government's budget.

Here are the tax rates in Florida:

Taxes in Florida
Taxes in Florida
Range Between 0% and 8%
Sales tax 6%‒8%
Income tax nil
Real estate tax 1,1%

A single annual real estate tax is collected every November. You can get the precise amount on the county tax department's official website.

Taxes and fees when acquiring a property

As we have already learned, Florida does not levy taxes on the acquisition or sale of real estate. However, the following costs cause the total purchase price to increase:

  • Stamp duty. It is charged during the purchase of a mortgaged housing unit. Every $100 deposited equals 35 cents.
  • Mortgage tax. 0.002% of every mortgage payment is sent to the state treasury.

Inherited property has a rate that ranges from 18% to 47%. Taxes are not due on a $1.5 million amount. It's called the Nil-Rate band.

Property taxes in Florida: what things should an investor bear in mind?

Real property gains tax

A 30% tax must be paid when an international buyer purchases real estate with the intention of renting it out later. Additionally, Form 4224 needs to be sent to the IRS (Inland Revenue).

In the United States, renting is a lucrative industry. As an illustration, New Yorkers spent $56.6 billion on rent in 2019, whereas Los Angeles renters spent $39.2 billion.

Additionally, there aren't enough units available despite the huge demand. The sector is quite limited. The cost of rent is always rising in 92% of US cities; Florida's cities are included in this vast majority.

Why is Florida a great state for renting? Of course, because of the influx of tourists. Every year, over 100 million people visit this place, all requiring a place to stay.

Tampa, Jacksonville, and Orlando, three major Florida cities, saw an increase in real estate costs between June and July 2022.

The national rate for 30-year mortgage loans rose as well and is now 5.55%. The market has been damaged by this. Additionally, rent prices have dropped. However, rental rates were far lower before the epidemic than they are today.

The government's efforts to place restrictions on rental price increases and fix them were the primary news in Florida's rental market. The idea has drawn harsh criticism from both the Florida Apartment Association and the Florida Realtors Association before it was done.

Tax penalties

If the tax is not paid on time, the penalty is 0.5% of the amount. If the tax is still not paid within 10 days of receiving a notification, then the penalty will be 1% per month.

Property taxes in Florida: what things should an investor bear in mind?

Are you ready to make real estate investments in Florida?

Florida continues to be one of the most sought-after locations for acquiring property and relocating permanently. Significant benefits of relocating to this state include tax cuts (in comparison to other North American states) and the opportunity for a potential rental income from homes or apartments.

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