The weather still draws people south, but frustration with higher taxes seems to be the final straw for some people to pack their bags and relocate.
A growing mood among high earners from the Northeast think that it’s time to cash in their real estate chips in high-tax states and move to places like Florida, where the tax bites are less and it’s cheaper to buy and maintain a home.
The Sunshine State always has been a favorite of transplants for its weather, beaches and lack of a personal income tax.
A bump in activity started with the federal tax overhaul in 2017. Although rates were cut for corporations and individuals, the ability of residents to deduct state, city and property taxes from their federal returns in places like New York, New Jersey and Connecticut was diminished. Other heightened tax obligations are kicking in as well. As of July 1, a three-decades-old “mansion tax” in New York State is being boosted in New York City to help pay for improvements to the city’s creaky subway system.
Upward reassessments also are taking their toll.
Drawing more people
It’s all to the advantage of Florida’s economy and its real estate industry, brokers and developers say. Some tax refugees are moving not only themselves, but their businesses to Florida, or setting up branch offices here.
Palm Beach County is becoming the next hot spot for out-of-state investors, just analyzing by the latest calls I have.
Some northern states say they’re feeling the pain. New Jersey reported a 35% decline in income-tax revenue for December 2018, according to the Wall Street Journal, and blamed the drop on tax policy. And New York Gov. Andrew Cuomo complained in February that the policy change was a “diabolical maneuver” to help red states “at the cost of blue states.”
People who previously were coming to Florida to buy a second home are now looking for primary residences.
I am selling a lot of properties to buyers who are trying to escape high taxes.
States audit buyers
Some state governments have taken to auditing the travels of homebuyers who leave for Florida and other states, but still commute back to their original states for work purposes.
The reason is simple: With every move out of town, the high-tax states are losing revenue. Now, they’re trying to keep outbound money at home by proving that tax refugees spend enough time in their original states to still qualify as residents who can be taxed.
Northern residents aren’t the only ones looking toward Florida.
Well-heeled but tax-strapped California residents who shoulder personal rates that exceed 12% are looking east – and the destination is not their traditional landing spot of Nevada, but Florida.
I'm seeing more and more Californians coming to Florida – as much as from the Northeast.