The state of Florida has seen an influx of new residents in recent years as Americans from high-tax states opt for its lower tax burdens, which could get lighter under a new proposal by the state’s Republican governor.
Gov. Ron DeSantis has called for eliminating property taxes as he works to provide Floridians with property tax relief – a debate that may carry over into next year after the legislature didn’t adopt a smaller $1,000 rebate for homestead property owners.
DeSantis has criticized property taxes as effectively forcing homeowners to “pay rent to the government” for their property and has called for a measure to protect Florida homeowners to be on the ballot next year.
Florida could prove to be an even more financially appealing destination for residents of high-tax states like California, New York and New Jersey with property taxes eliminated or further reduced – though they already stand to save substantially if they move to the state.
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Raul Gastesi, co-founder of Gastesi Lopez Mestre & Cobiella and a long-time resident of Florida who has 35 years of experience in real estate and government relations, told FOX Business, “We’re seeing more homebuyers make the move from states like New York, New Jersey and California to Florida, and it’s not just about the weather.”
“A $600,000 home in those states can come with roughly $8,000 to $13,000 in property taxes. In Florida, the same home would come with a tax bill closer to $4,900, and that’s before factoring in the homestead exemption,” he explained. “Florida’s homestead exemption can reduce a home’s taxable value by up to $50,000, resulting in even greater annual savings for full-time residents.”
If Florida lawmakers, or voters, follow through with the proposal to end property taxes in the state, that $4,900 property tax bill would be eliminated – saving the homeowner about $408 per month over the course of the year.
Gastesi added that Florida’s lack of a state income tax would save a household earning $150,000 a year about $8,000 to $10,000 per year, so that, “When you add everything together, people can end up saving $10,000 to $20,000 annually just by relocating.”
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He also weighed in on the debate over eliminating property taxes, noting that while it would save homeowners money, it could also cause other challenges in financing the government.
“There’s been growing talk about eliminating property taxes on primary residences, and if that ever moves forward, it could dramatically reshape the financial equation for homeowners. It would make owning a home here even more attractive,” Gastesi said.
“But the big question is how the state would make up for that lost revenue. If the solution ends up being higher sales taxes, that could shift the financial burden onto low-income households by cutting into their ability to spend and live comfortably,” he added.
Bill Harris, former CEO of TurboTax and PayPal, analyzed the change for FOX Business by modeling his own move from Redwood City, California, to Miami Beach, Florida, based on the hypothetical that he was a single taxpayer with a $200,000 salary, a $1 million investment portfolio who was moving between one-bedroom single-family homes.
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“My marginal California tax rate would be 9.3% compared to 0% in Florida. Including the taxes on my investments, my total federal and state income tax bill might be approximately $68,000 in California and $48,000 in Florida,” Harris said.
He said that the average two-bedroom home in Redwood City is about $1.8 million, whereas it’s roughly $750,000 in Miami Beach – which would leave about $1 million left over following a move and result in savings of about $10,000 per year in property taxes. Though Miami Beach’s 2% property tax rate is higher than Redwood City’s 1.2%, the lower value of the 2-bedroom home yields about $5,000 in savings.
Harris added that if Florida were to eliminate property taxes it would mean another $14,000 in savings – though he said that doing so would require a constitutional amendment along with the replacement of that revenue source with sales taxes, so he thinks it’s unlikely to happen soon.
He also noted that the cost of living is about 50% higher in Redwood City than in Miami Beach, which could yield savings of about $10,000 in living expenses.
“Add it up, and I could save about $45,000 a year in expenses and taxes, with a one-time windfall of $1 million from trading homes,” Harris said.
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