Why Becoming a Florida Resident Might Be a Good Retirement Move – And How to Do It

Category: Financial and taxes in retirement

June 21, 2011 — The first article in this series, “Five Reasons Why You Should Retire in Another State“, explored the major reasons why it might be a really good idea for you to move from the Midwest or the Northeast to a different state. In this related article we have had the good fortune to interview Barton Smith, a successful Florida attorney who has helped many of his clients establish legal residency in the Sunshine State.

TR: Bart, thanks for taking the time to talk with us. We understand you are not giving legal advice here, but have agreed to provide some helpful overview information for Topretirements members. First off, could you tell us if there are any advantages to becoming a legal resident in Florida?

BSmith: There are obvious advantages to becoming a Florida resident. The first, and most well known, is… Florida has no state income tax. However, there are many states that offer this advantage; one nearby state is Texas. Where Florida differentiates itself from other states is Florida’s homestead protection.

TR: OK, we’ll bite. What is the Florida Homestead Protection?

BSmith: First, Florida’s homestead protection is found in our constitution which requires a supermajority to amend. Thus, the protection afforded to a Florida resident’s primary residence is firmly rooted and very difficult to amend or eliminate. When a person is looking for a residency the safety that this protection is grounded in our state constitution should give someone the peace of mind that even in troubled times the homestead protection will not be subject to change. The homestead protection comes with advantages beyond just the homestead exemption. It protects the Florida resident from losing their home, no matter what the value, to a creditor or any other lien except for mortgages. Although no one plans on retiring and having to file for bankruptcy, it is good to know that should this occur your home is safe.

TR:So does this Homestead Protection also save money on taxes?

BSmith: The Florida “Save our Home Act” provides for a homestead exemption on a Florida residents primary residence. Once qualified for the exemption, the assessed value of the property for taxes purposes has an exemption of the first $50,000.00 of taxable value for all taxing entities, except the School District, and a $25,000.00 exemption of taxable value for the school district. Also, and probably more importantly, once the property is homestead the assessed value for tax purposes cannot rise more than 3% in any given year. Thus, over a long time frame a property’s market value will increase more than its assessed value deriving equity from the difference which you do not pay taxes on.

TR: So how do I qualify for this exemption?

BSmith: In order for a Florida resident’s primary property to qualify for Florida’s homestead exemption you must intend for the residence to be your primary residence. Then the standard to obtain the exemption is a factual determination made by the County Property Appraiser’s office where the subject property is located. No one factor controls, but it is a totality of the circumstances test that is used. Factors included are:

(1) A formal declaration of domicile by the applicant recorded in the public records of the county in which the exemption is being sought.

(2) Evidence of the location where the applicant’s dependent children are registered for school.

(3) The place of employment of the applicant.

(4) The previous permanent residency by the applicant in a state other than Florida or in another country and the date non-Florida residency was terminated.

(5) Proof of voter registration in this state with the voter information card address of the applicant, or other official correspondence from the supervisor of elections providing proof of voter registration, matching the address of the physical location where the exemption is being sought.

(6) A valid Florida driver’s license issued under s. 322.18 or a valid Florida identification card issued under s. 322.051 and evidence of relinquishment of driver’s licenses from any other states.

(7) Issuance of a Florida license tag on any motor vehicle owned by the applicant.

(8) The address as listed on federal income tax returns filed by the applicant.

(9) The location where the applicant’s bank statements and checking accounts are registered.

(10) Proof of payment for utilities at the property for which permanent residency is being claimed

Fl. Stat. 196.015

Other considerations are taken into account, but in reality if you become a Florida resident and intend to make your Florida home your primary home you should qualify.

TR: Is this basically the same process as becoming a Florida resident?

BSmith: The only major requirement for changing your state residency is owning a home in Florida, obtaining a Florida Driver’s license and registering to vote in Florida. It does not take relatively long. Of course, I do not enjoy the wait at the DMV, but I believe most states are comparable in this regard.

TR: How about other tax considerations for people moving to Florida from other states?

BSmith: I am not an accountant and always advise people to speak to a Florida accountant before you transition to Florida residency. Things to consider are estate and inheritance taxes in your new state vs. your current home state.

TR: What kind of enforcement issues do people get in trouble with?

BSmith: There are several. One area where people get into trouble is if they decide to homestead their Florida property and a property in another state. Most property appraiser’s offices do research homestead exemptions in other states; if the double homestead is intentional and not accidental it is a crime.

Another is maintaining conditions whereby the state you are moving from continues to believe you are still a state resident. This is an area where you should speak with your local attorney and or accountant. For example, if you do not spend more than half the year (365 / 2 plus 1 day) in Florida, your home state might contest your residency. Similarly, by not following any of the steps I outlined above (e.g.; maintaining a NY drivers license or voting in Vermont), your home state could contend you are still a resident in that state, and assess you income taxes and fines.
/blog/financial/why-becoming-a-florida-resident-might-be-a-good-retirement-move-and-how-to-do-it.html/
Lastly, the same type of compliance issues are related to the Florida Save Our Home Act. Florida has prosecuted individuals who made a sham of becoming a full-time resident of the state when they actually were legally residents somewhere else.

TR: Thanks Barton, this has been extremely helpful to our members!

About Barton W. Smith, Esq.:
Barton Smith, P.L. provides a wide range of services to clients spanning the entire spectrum of legal services. All of our lawyers share the same vision: to provide the quality of services offered by the most well-regarded large firms with the flexibility and cultural advantages of a smaller one.

BARTON SMITH, P.L.
624 Whitehead Street
Key West, Florida 33040

Tel: 305-296-7227
www.bartonsmithpl.com

For further reference:
Part 1: “5 Reasons Why Should Retire in a Different State
The Tax Friendliest States for Retirement
Worst States for Retirement – Updated

Posted by John Brady on June 21st, 2011

23 Comments »

  1. Here’s a suggestion – stay where you are of move to another state. We’ve got enough damn people in Florida who don’t contribute anything but pollution and more traffic.

    We don’t need any more “residents” putting more demands on the already underfunded infrastructure.

    Editor’s comment: Ouch!

    by Bigfoot — June 21, 2011

  2. we love the sunshine state: and want 2 b ur neighbor bigfoot…:smile:

    by bill — June 21, 2011

  3. What about full-time RVers and others who hope to travel full-time? How can one establish “residency” in a tax friendly state when one will not own any real property in that state? We would like to travel for several years, then settle down, but how does one get rid of all psossesions (including house) and do this?

    by Mad Monk — June 21, 2011

  4. Well Big–ahh–foot, Seeing that with me being a disabled combat veteran, I believe I did my part to defend Florida as well as the rest of my country. If you don’t mind, my family and I will live anywhere we “damn” well please.

    Sorry folks, I don’t mean to be overly sensitive or rude.
    BTW we love Top Retirements…Outstanding job!

    by cros99 — June 22, 2011

  5. On my way to FLA now, looking to be a permanent. Now, how do I make
    one of those ‘hanging chads’ you folks are so famous for??

    by Keith — June 22, 2011

  6. Anything has to be better than another Illinois winter…even moving in to Bigfoot’s neighborhood.

    by Ted — June 22, 2011

  7. I have the same question as Mad Monk. How do you end your home state residency if you’re planning on traveling in an RV and not settle for awhile, or what about residency in a new tax friendly state if you’re Rv living and travleing?

    by Lynn — June 22, 2011

  8. Loved the article! We have the best place to retire to, not only the benefits of living in paradise but never having to lift a finger to work again.. just play.

    by Maureen — June 22, 2011

  9. This isn’t directly related to the homestead issue, but it’s certainly related to moving to Florida — or not.
    My husband and I love winter (though they can be a bit long); and spring; and fall; and summer (but not high humidity and high heat for weeks on end). Which is why, even though my husband’s four siblings (who I love dearly) all live in Florida, and we’d love to live near them, we’re having serious doubts about whether we’d really be able to deal with the high humidity and more-or-less one-season weather (I also have asthma). Thoughts, anybody?

    by Marian — June 22, 2011

  10. I’m 53, so my “big plan” us to buy a cheap mobile home or condo in a 55+ community. Notice I said cheap. That would hopefully be cheaper than being a snowbird renter in the long run. I’d still want to be north during the summer and fall, for sure. No one is going to come knocking at my door to see if I’ve lived in the place for 5 months or 7 months. I pay most of my bills via internet anyway. I figure in 10 years or so when I actually retire I’ll have enough equity in the condo or mobile home to now worry toooo much about monthly payments.

    by Susan — June 22, 2011

  11. Thinking of relocating to Florida, consider threat of wildfires & evacuating one’s home every spring, then the wet season comes, greatful because the wildfire threat diminishes but the hurricanes & tornado threat arrives, very severe thunderstorms, humidity that doesn’t quit for months on end, largest most annoying insects I’ve ever seen and a cost of living that is now higher than where we moved from. Love Oct-March, the flowers, wildlife, (although because of the sprawl that is becoming less and less, being close to the ocean and not having to shovel snow, otherwise, wish we’d stopped in the Carolinas or Tennessee. Check it out carefully first, property taxes are very high it you haven’t lived here & been homesteaded for years, H/O Ins plan on it going up $200+ each year, water is also very expensive.
    thought we’d checked it out carefully, coming down at all times of year, comparing expenses, etc but even the oldtimers (meaning the people who are native Floridians) will tell you its not the way it use to be.

    by Barb — June 23, 2011

  12. Consider NE Florida if you’re concerned about hurricanes. If you check out NOAA (National Oceanic and Atmospheric Administration), you’ll see NE Florida is very safe as far as hurricanes. There are three seasons (we don’t have winter), but there have been dozens of times I’ve worn a winter jacket to walk my dog. Yup, there is heat and humidity, but I’ve also lived in Maryland, NJ, and Ohio, and I can tell you that the summers there were hot and humid, too. If you’re close to the ocean, there is always a delightful breeze.

    Jan Cullinane, The New Retirement: The Ultimate Guide to the Rest of Your LIfe (Rodale)

    by Jan Cullinane, co-author The New Retirement: The Ultimate Guide to the Rest of Your LIfe (Rodale 2007) — June 23, 2011

  13. In response to Jan above, I live in NE Florida, south of Jax, very safe doesn’t mean won’t happenin fact those supposedly in the know say we are overdue. I’m from New England,lived in Eastern Kentucky for awhile also,had heat and humidity there as well but the humidity was nothing like Florida, actually there are some people here who like the humidity so its all in your preference, yes if you are close to the ocean you do get a nice breeze that is true, but the closer you are to the ocean the higher your H/O ins is and more chance of severe damage when a hurricane hits.
    All I’m saying is be aware of the bad parts as well as the good and check it out carefully, apparently I wasn’t careful enough.
    Also, we have the most beautiful sunrises/sunsets, cloud formations & rainbows I’ve ever seen.

    by Barb — June 24, 2011

  14. Very informative article and thanks to Attorney Smith. Thanks to Barb and Jan
    and the other folks for their comments. We’re planning on moving to FLA in 3 years, (SORRY BIGFOOT). The part of FLA we like best is the NE FLORIDA area, of course my research is strictly thru the net. We’re interested in a safe, clean, modern retirement community. Do not need all the bells & whistles i.e., golf course. If Barb/Jan could recommend any communities to research i’d be grateful. Sick of Boston, and if you want to compare cost of
    living expenses i’d be happy to.

    by hawksise — June 24, 2011

  15. @ Marian – I too have asthma, but did not develop it until I moved OUT of Florida, to the great State of Nebraska. I was raised in FL and lived there 30 years. You get used to the humidity. It burns off somewhat before noon, but can return with the afternoon showers that happen daily for a season. Many residents spend the humid months going from air-conditioned home, to air-conditioned car, to air-conditioned job, etc. But, if you wish to enjoy the best of Florida, which is the out of doors, then don’t spoil yourself. Get out there and enjoy it and you will get used to it. Your skin will love the moisture. Your hair not so much. And you will appreciate year round good weather when you don’t have to shovel snow or chip ice or “walk like a penguin” or deal with frigid winds. Florida is amazing, although not for everyone. There’s always California. LOL

    by Christi — June 25, 2011

  16. Hi hawksise,

    If you are interested in an active adult community, look into Del Webb Sweetwater. Of course, I don’t know your price range, but it’s in NE Florida, it’s safe, modern, and doesn’t have a golf course. It does have a lot of amenities, which is a big plus if you’re moving to a new area and want to start building a network of friends. As you can guess, it’s also a lot cheaper – the Cost of Living (based on an average of 100) is 94 in Jacksonville and 138 in Boston.

    Good luck,
    Jan Cullinane, co-author, The New Retirement: The Ultimate Guide to the Rest of Your Life (Rodale)

    by Jan Cullinane, co-author The New Retirement: The Ultimate Guide to the Rest of Your LIfe (Rodale 2007) — June 25, 2011

  17. If Florida has such a good homestead law… why have so many lost their homes in florida?

    by Jim King — June 25, 2011

  18. Hi Susan – you are correct – they don’t knock on your door. It’s called “Certified Mail”, and they certainly do random checks of new residents. If you are buying on the “cheap”, consider that for a sale in the amount of $75,000, you pay only $1400 a year in taxes in my area without homestead exemption. Is it really worth a whopping fine if you get caught? :cry:

    by D-Ann — November 15, 2011

  19. I hope that there is enough room in florida for two more people. We just got back from a look around and liked what we saw. Dose anyone have any info. on the Ocala area and the homes at On Top Of The world area? My wife and I are both Vets. and would like to use Tri. Care Ins. Has anyone had any experience using it in this area, are there military hospitals and out patient medical centers around Ocala? Thank you ahead of time for any help and info.

    by Brad — November 16, 2011

  20. That’s an excellent question, Jim! I have wondered the same. I hope that someone has an answer. Jane

    by Jane — November 16, 2011

  21. […] What state do you want to be a resident of? Becoming a snowbird represents an opportunity to become a resident of a more tax-friendly state – if you do it correctly and meet the legal requirements to do so. Caution: some states like New Jersey and New York are very aggressive about snowbirds who own property in those states but claim residency elsewhere. Make sure you have your t’s crossed and i’s dotted! (See “Why Becoming a Florida Resident Might Be a Good Idea“). […]

    by » Horrible Winters Make More Boomers Consider Becoming Snowbirds Topretirements — March 3, 2014

  22. Getting back to the original article topic of the Homestead. The question that I have is if one is on medicaid and has a homestead, can the state go after the homestead to be reimbursed for medicaid expenses once the medicaid recipient passes away. My guess would be not if the spouse is still alive but what happens to the property after that. Can it pass to the heirs or will the state claim the homestead to be reimbursed for Medicaid expenses paid on behalf of the homeowner?

    by j caplin — March 5, 2014

  23. PORT orange florida. Is great to retire in,
    There is a great place were moving to,
    Hawthon village. In port orange,
    It’s very nice, cheap rent,
    More. Of a home,
    Swimming. Pool. And. Events,
    Port orange florida. Is great for people. Over 50 AND older,
    We’re. In our 60s

    by Peggy — July 3, 2014

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