Florida remains the premier destination for wealth migration in the United States. By relocating, high-net-worth individuals can effectively eliminate state income tax, protect assets through Homestead laws, and secure their legacy with favorable estate planning statutes. However, the process of establishing “Domicile” requires strict legal adherence to avoid audits from your former state.
1. The “Zero Income Tax” Advantage
Florida is one of only nine states with no state income tax on wages, salaries, or pension income. Furthermore, there is no state tax on capital gains. For an investor selling a business or a significant stock portfolio, this distinction alone can save millions.
| Tax Category | New York / California | Florida |
|---|---|---|
| State Income Tax | Top rate 10.9% – 13.3% | 0% |
| Capital Gains Tax | Taxed as Income | 0% |
| Estate/Inheritance Tax | Yes (State Level) | None |
2. Understanding the Florida Homestead Exemption
When you purchase a primary residence in Florida, you are entitled to the powerful Homestead Exemption. This is not just a tax break; it is a constitutional protection.
The Financial Benefit
The exemption reduces the taxable value of your home by up to $50,000 for property tax purposes. More importantly, it activates the “Save Our Homes” (SOH) assessment cap. This cap limits the annual increase in the assessed value of your home to 3% or the Consumer Price Index (CPI), whichever is lower.
The Asset Protection Benefit
Florida’s Homestead law is arguably the strongest in the nation for asset protection. In most cases, a creditor cannot force the sale of your primary residence to satisfy a judgment (exceptions apply for mortgages and mechanic’s liens). This provides an unparalleled safety net for business owners and physicians.
3. The “Domicile” Trap: The 183-Day Rule
Buying a house in Florida does not automatically make you a Florida resident for tax purposes. High-tax states (like NY and CA) aggressively audit former residents who claim to have moved but still maintain ties.
To withstand a residency audit, you must prove Domicile—the intent to make Florida your permanent home. The general rule is the “183-Day Rule” (spending more than half the year in Florida), but you must also take specific legal steps:
- File a Declaration of Domicile with the Clerk of Court in your Florida county.
- Update your Driver’s License and Vehicle Registration within 30 days.
- Register to vote in Florida.
- Move your “center of gravity”: Move bank accounts, primary doctors, and safe deposit boxes to Florida.
4. Estate Planning in Florida
Florida does not impose a separate “Death Tax” or estate tax. However, your existing Will or Trust from another state may not be fully compliant with Florida’s specific statutes regarding Homestead descent and Power of Attorney.
The “Ancillary Probate” Issue
If you own real estate in your former state, your heirs may face “Ancillary Probate” (two separate court processes). A specialized Florida estate planning attorney will typically recommend placing out-of-state assets into a Revocable Living Trust to avoid this costly and public nightmare.
Conclusion: A Strategic Financial Move
Moving to Florida is a lifestyle upgrade and a strategic wealth preservation maneuver. By properly leveraging the Homestead Exemption, adhering to domicile laws, and updating your estate plan, you ensure that your wealth remains with your family, not the tax collector.
Protect Your Assets Today
Do not navigate the complex transition of domicile alone. Schedule a consultation with a certified Florida Tax Attorney or CPA to build your relocation roadmap.
Find a Tax Professional
Disclaimer: The information provided in this guide is for general informational purposes only and does not constitute legal, tax, or financial advice. Tax laws are subject to change. Always consult with a qualified attorney or tax professional regarding your specific situation.