Florida has long been a favorite winter retreat for New Yorkers, giving them a warm, relaxing place to escape the bitter and bustling New York winters. Recently, it seems that permanently moving from New York to Florida is becoming a more common occurrence.
According to Bloomberg’s analysis, Florida is reeling in new residents—and their wealth. In fact, Florida came out on top in this study, attracting $17.2 billion more than it lost. Florida was the recipient of a “wealth exodus” from many states, including New York, which contributed about $8 billion to Florida’s income. So why are people making the move?
TAX BENEFITS OF MOVING FROM NEW YORK TO FLORIDA
One of the big reasons to move from New York to Florida is the tax benefits. Florida is one of seven U.S. states with no state income tax. New York has income tax rates exceeding 8% with additional income taxes levied within New York City. Florida’s corporate tax rate is also 5.5%, compared with 6.5% in New York.
Taxpayers can recoup some of these losses from state income taxes by filing a State and Local Tax (SALT) deduction on their federal forms. However, in 2018, the Tax Cuts and Jobs Act (TCJA) limited that deduction to $10,000 annually until 2025. While this does not affect the majority of tax payers, the tax implications for higher-income individuals are substantial.
This makes relocation from New York to Florida especially appealing to affluent New Yorkers, such as Carl Ichan. The moves equates to major savings for this billionaire, just like it did for other prominent billionaires that relocated from New York to Florida – David Tepper, Paul Tudor Jones and Eddie Lampert.
CHANGING RELOCATION TIMELINES DUE TO COVID-19
The existing motivation for moving from New York to Florida has taken on increased urgency and importance due to COVID-19. “Everybody who was on the fence to move for tax reasons now seems to be moving,” said Danny Hertzberg, an agent with the Jills Zeder Group at Coldwell Banker in Miami Beach. “We hear over and over, ‘My tax attorney spoke to me,’ or ‘I spoke to my accountant.’ People are thinking about establishing residency.”
There may be something else to it, too. The world is changing rapidly in the midst of COVID-19, and businesses have had to adapt to virtual, remote work. A lot of people are asking themselves, do I really need to physically reside near my company? Do I really have to be in New York anymore to do the work I need to do?
For many, there is an added incentive to relocate right now due to the current housing market. Inventory is low in many areas of New York, which puts prospective sellers in a great position. It also happens to be a great time for those same sellers to consider buying (in say, Florida) to take advantage of some truly great interest rates. Due to differences in cost of living, New Yorkers have substantial buying power in Florida, which can allow them to really find their dream home when moving from New York to Florida.
MOVING FROM NEW YORK TO FLORIDA DURING AN ELECTION YEAR
Some of the recent financial urgency may also be based on uncertainty revolving around the election. According to Florida Realtors, “Lloyd Abramowitz’s high-net-worth clients at Cerity Partners are asking more often about the financial wisdom of moving to Florida. They’re concerned about New York City’s rising crime rate, and a higher federal tax burden should a Democrat win the presidency, said Abramowitz, a New York-based partner at the firm.”
With it’s temperate climate, the sunshine state is an appealing location to people across the nation. The lifestyle is hard to beat, and the tax breaks are substantial. If you are considering relocating to Florida, reach out today!