Estate Planning for New Florida Residents (Domiciliaries)


VIII. Florida Taxes

 

While the State of Florida does not have a personal income tax, there are other important taxes that a domiciliary subjects himself or herself to upon becoming a legal resident.

 

A. INTANGIBLE TAX

The intangible tax is levied upon property such as stocks, bonds, loans, notes, accounts receivable and other obligations for the payment of money. Most persons domiciled in Florida on January 1st of each year, must file an intangible tax return. For these purposes, persons also include individuals and fiduciaries; including trustees, guardians, personal representatives and administrators. The intangible tax return is due on or before June 30th of each year. There is no intangible tax on cash, bank accounts, savings and loan accounts, certificates of deposit, obligations and bonds of the State of Florida and its subdivisions, and bonds of the United States and its subdivisions. Therefore, all Florida domiciliaries should file an Intangible Tax Return that lists all stocks and bonds owned as of December 31st of the preceding year.

1. Annual Tax. The annual tax on intangible personal property is imposed at the rate of 1.5 mills per dollar ($1.50 per $1,000 of taxable intangibles) until December 31, 1992. Effective December 31, 1992, this tax will be at the rate of 2.0 mills per dollar. Thus for a portfolio of $1 million subject to tax, the tax is $2,000. This creates year-end planning opportunities (i.e., moving from non-exempt to exempt investments at year end).

2. Non-recurring (Recordation) Tax. The non-recurring (recordation) tax is imposed at a rate of 2.0 mills per dollar for 1992 and 1993.

3. Personal Exemption. A natural person is allowed an exemption from the annual tax for the first $20,000 of taxable property. A husband and wife filing jointly are each entitled to a $20,000 exemption. With respect to the last .5 mill of the annual tax (and the last 1.0 mill of the annual tax, effective in 1993), every person is entitled each year to an exemption of the first $100,000 of taxable property. A husband and wife filing jointly are allowed an exemption of $200,000. Therefore, in 1992 and 1993, an individual having $100,000 or less of taxable property (or a husband and wife having $200,000 or less of taxable property) are still taxed at the 1 mill rate. There are no such exemptions for corporations.

Notes, bonds, and other obligations secured by a mortgage, deed of trust, or other lien on real property in Florida are subject to a non-recurring tax at the time of recordation, and are exempt from the annual intangibles tax. However, notes and obligations other than bonds are exempt to the extent that such notes and obligations are secured by a mortgage, deed of trust, or other lien upon real property which is situated outside of Florida.

B. FLORIDA ESTATE TAX

The Florida estate tax will not increase the total estate tax which must be paid by an estate. Rather, the State of Florida merely collects a portion of the estate tax which would have been paid to the United States government. This state is also entitled to a share of the estate tax from taxable estates of all non-resident decedents when such estates include real property located in Florida. Again, this amount is a percentage derived from the estate tax paid to the Federal Government. If a Federal Estate Tax Return is required to be filed, a completed copy must be filed with the Florida Department of Revenue. In addition, the state may grant up to a one-year extension of time for payment of the tax upon showing that the payment on the due date would impose an undue hardship upon the estate. The filing of the return with the State, the payment of the state share of the estate tax, a request for an extension and advising the State of an IRS Notice of Deficiency is the responsibility of the Personal Representative.

C. CORPORATION INCOME TAX

Florida’s corporate income tax is imposed at the rate of 5.5%. If a taxpayer is subject to the alternative minimum tax, the amount of the tax is the greater of 5.5% of the taxpayer’s net income for the taxable year determined without the application of the Federal alternative minimum tax, or 3.3% of the taxpayer’s net income for the taxable year.

D. REAL PROPERTY TAXES

Real property taxes are imposed by the local governments under the supervision of the Florida Department of Revenue. The tax base is 100% of fair market value of the property. There are several exemptions including a homestead tax exemption of $25,000.00 of the assessed valuation of a home used as a residence; an additional $500.00 homestead tax exemption available for widows and a 100% exemption available to totally disabled persons who use and own the real estate for homestead purposes and have resided in Florida for the preceding five years. The homestead exemption status should be filed between January 4th and March 1st of each year.

E. SALES AND USE TAX

The sales and use tax is charged for certain services, meals, rentals of rooms, and purchases of tangible personal property. The rate is 6% of a taxable transaction and 6.5% in Dade and certain other counties.

F. TANGIBLE PERSONAL PROPERTY TAX

The tangible personal property tax is a tax assessed on property used for the production of income such as furniture and fixtures in an office or rental apartment. Household furnishings, including wearing apparel, are exempted from the Tax. It is unclear as to whether this exemption applies to non-residents, for example, persons who have a winter home in Florida, while maintaining domicile in another state. Recent case law has held the distinction between residents and non-residents as unconstitutional.

G. POSSIBLE NEW TAXES

 

Author:

Leave a Reply

Your email address will not be published. Required fields are marked *