Tax-related considerations when buying property in Florida

BY THE PERK LENDING TEAM | September 1, 2023 | 2-minute read

Thinking about buying in Florida? You’ve come to the right place! Below are some tax-related considerations to discuss before buying property in the sunshine state.

Disclaimer: Tax laws and regulations can change, so it's important to consult with a tax professional or financial advisor for the most up-to-date and personalized advice based on your specific situation.

Homestead Exemption

Florida offers a homestead exemption to residents who make their home their permanent residence. This exemption can result in a reduction in property taxes by lowering the assessed value of your home for tax purposes.

Property Taxes

Florida has no state income tax, but it does rely heavily on property taxes to generate revenue. Property taxes can vary widely based on the county and municipality where you're buying the home. It's important to research and understand the local property tax rates and any potential increases.

Mortgage Interest Deduction

The mortgage interest deduction allows homeowners to deduct the interest paid on their mortgage from their taxable income, up to certain limits. This can result in significant tax savings, especially during the early years of your mortgage when interest payments are higher. Be sure to consult with a tax professional about the current rules and limitations.

State and Local Taxes (SALT) Deduction

The SALT deduction allows you to deduct certain state and local taxes, including property taxes, from your federal income tax. While there is a cap on the total amount of SALT deductions you can claim, this can still be a valuable deduction for homeowners in states with higher property tax rates.

Capital Gains Tax Exclusion

When you sell your primary residence, you may be eligible for a capital gains tax exclusion. This means you can exclude a certain amount of the capital gains from the sale of your home from your taxable income. As of the last update, the exclusion was up to $250,000 for individuals and up to $500,000 for married couples filing jointly, provided certain conditions are met. Consult a tax professional for the most current information.

Energy-Efficient Improvements

Some energy-efficient home improvements may qualify for tax credits or deductions. While federal tax credits for energy-efficient improvements have been available in the past, their availability can change, so it's best to check for any current programs.

Remember, tax laws can be complex and subject to change. It's always a good idea to consult with a certified tax professional or financial advisor who has knowledge of the most current tax regulations and can provide advice tailored to your individual circumstances.

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