The State of Florida does not impose a tax on the income of its citizens. While a corporate income tax is collected, individuals are not required to file an income tax return or pay any individual income taxes. The assessment of an individual income tax is prohibited by the Florida Constitution.
No State Estate Taxes
Florida's estate tax system is commonly referred to as a "pick-up" tax. This means that the state picks up all or a portion of the credit for state death taxes allowed by the federal government on the federal estate tax return. For Florida residents dying after January 1, 2005, no Florida estate tax is due because federal law no longer allows a credit on the decedent's federal estate tax return for state estate taxes. Other states impose estate taxes even if a federal estate tax is not required, and may impose estate taxes on the assets of Florida residents situated outside of Florida.
Intangible Tax Repealed
Florida eliminated the tax on the intangible personal property owned by Florida residents after 2006. Prior to the repeal of this tax, such assets were taxed at a rate of $.50 per thousand dollars of value.
Florida Homestead Benefits
A $50,000 homestead property tax exemption is available to homeowners who are residents of Florida and meet certain requirements. Certain exemptions are also available to blind persons and other physically-challenged residents. More importantly, after the homestead exemption is awarded to a property its increase in assessed value any future year is limited to the lesser of three percent (3%) or the percentage change in the Consumer Price Index (CPI) for the previous year. This appraised value restriction is now portable with regard to the sale of a previous residence and acquisition of a new home. An additional filing with the Property Appraiser is required to obtain this benefit. Beyond the real estate tax benefits of Florida homestead property, Florida law also provides that homestead property is exempt from forced sale to pay creditors regardless of the property's value.
Restrictions on Devise of Homestead
While homestead property receives the benefit of the homestead exemption for property tax and forced sale purposes, the Florida Constitution restricts the ability of the owner to devise the property at his or her death. For example, if a Florida resident is the sole owner of his or her homestead and is survived by a spouse, the homestead must be devised to the surviving spouse and may not be devised to any other person or even to a trust for the sole benefit of the spouse. Any other attempted devise is deemed invalid, and instead the surviving spouse receives a life estate and the decedent's children receive the remainder interest in the property. If a decedent is survived by a spouse and a minor child, then the devise of Florida homestead is further complicated. New Florida residents should discuss these issues with their Florida legal advisor.
Some Individuals May Not Serve As Personal Representative
Florida law also limits the individuals that may serve as the personal representative of a Florida resident's estate. Generally, a non-resident may not serve as personal representative unless they are related to the decedent by blood or marriage.
Review and Update of Wills and Other Estate Planning Documents
Because of these unique issues of Florida law, and to provide further evidence of a person's domicile in Florida, it is advisable for new Florida residents to discuss updating theirs wills and other estate planning documents with Florida counsel.
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