by SC Features Writer Reanna Haas
Although the Sunshine State’s warm weather and coastal destinations are major draws, Jeff Muddell, Sanibel President of the Sanibel-Captiva Trust Company, said there are significant financial benefits to consider when moving to Florida.
“The key benefits of residing in Florida, is there’s no income tax, there’s no intangible tax [and] there’s no state estate tax,” Muddell said. “There are also Florida homestead benefits and protections that are beneficial if you claim Florida as your residence, your homestead.”
Claiming a Florida home as your domicile tells the state of Florida that you are seeking the safeguards and advantages of homesteading in Florida. Even if you live part of the year in another state, you can claim the benefits by proving your Florida home is your primary residence.
“The first factor that any state or any entity is going to look at is how many days you live in the state,” Muddell said. “You have to live in the state of Florida for six months and a day, and you have to be able to prove that. In some cases, your previous state will try to say ‘Hey, you owe us taxes. You owe us income taxes…’ So, we have individuals that keep track of their dates on calendars and apps, just in case, anybody from their previous state asks.”
Other important steps to take when claiming Florida residency are obtaining a Florida driver’s license, updating your voter registration and registering your vehicle in Florida. Once these steps are completed, a new Sanibel resident can tell Lee County that they are looking to make their new Sanibel home their domicile.
“If I’m doing the laundry list…and I also claim Florida as my homestead, then I get the benefits of homesteading in Florida,” Muddell said. “When I call that Sanibel home, my homestead, right off the bat, I get a $50,000 exemption, a lowering of that assessed value that lowers my tax liability.”
Muddell detailed the long-term benefit of claiming homestead on your property is not only lowering the assessed taxable value but locking in that value – after claiming homestead your taxable value will not increase more than 3% each year, following the claim.
Since Hurricane Ian, the appraised value of most Sanibel homes has decreased significantly, making it in a new home buyer’s best interest to claim homestead while values are down before the market returns to its pre-Ian state.
“As we recover from [Ian, on] Sanibel property values we hope, [will] continue to rise back to where they were,” Muddell said. “By locking in homestead exemption, I’m locking in a very small 3% maximum increase in the price value, on an annual basis. They won’t grow as fast as we hope that the actual market value of homes will.”
Sarah Ashton, Broker Associate at Keller Williams Fort Myers and The Islands – Ashton Kirchner Group, shared insight on the property market in Sanibel since the “post-pandemic boom” and how this has affected homebuyer decisions over the past four years.
“Prior to hurricane Ian, we were coming off the post-pandemic boom. And what I mean by that is we had a lot of bidding up of values of property. We had a very low inventory. We had a lot of people kind of racing to get their piece of property in Florida,” Ashton said. ‘So then [when] the pandemic was winding down and we were getting back to ‘normal’ and Florida was still experiencing a fair amount of interest, and we still had very low inventory – values really went up.”
Ashton said realty trends tend to be cyclical in nature, historically high property values and market booms can be followed by significant decreases. These cycles were made apparent when Hurricane Ian damaged and lowered the values of the majority of the homes on Sanibel and Captiva.
“Then hurricane Ian hit and for Sanibel and the greater Fort Myers area, it put things on a very significant pause,” said Ashton, describing the market following the post-pandemic boom. “So what we have been experiencing since September of 2022 has been a somewhat slow recovery. There was a nationwide slowdown in real estate that was starting right before Ian hit, because of increased interest rates. And just basically, you know, a lot of people had already made a move… When Ian hit, it kind of brought all of the factors that were slowing down, the real estate market nationwide, flash into our face.”
Though the cost of owning a coastal home in Florida continues to rise, the benefits of homesteading can be a valuable asset over time.
“I’ve been homesteading now for over 20 years on the island. I can tell you, my real estate taxes are ridiculously low, which I very much appreciate, but the expense of owning this house has gone up considerably, of course,” Ashton said.
Muddell shared that anytime there is a rise of people moving to Sanibel there is a rise of people looking into how to claim a homestead in Florida. Along with the community Sanibel provides, realty experts agree that home buyers could benefit from knowledge of Florida tax and homestead benefits.
“I think the people that moved to Sanibel moved to Sanibel because of its community, first of all, and the fact that it’s a sanctuary island and it’s a small community,” said Mary Bondurant, Realtor at Kingfisher Real Estate. “I find it sometimes amazing that some people know about the state income tax, but they don’t know about the homestead deduction that they could get up to two persons per household. So, that I think becomes valuable because of the $25,000 each person receives. So in making decisions, it could, it could make a decision for them in buying a home.”
Muddell said the trust company holds a monthly workshop which is to explain the in and outs of becoming a Florida resident and claiming the benefits, with a rotation of local attorneys.
“For us, it’s part of the big picture, how we take care of our community and specifically our clients. Because, you know, we not only handle wealth management and investments, but we really work with so many families on understanding the complexities of the environment here on Sanibel and helping maximize all their benefits, even if it means their tax benefits and such too,” Muddell said.
This month’s ‘Domicile Day’ seminar will be held on Feb. 27 at 1 p.m. at the Sanibel-Captiva Trust Company’s office at 2450 Periwinkle Way. To register for this seminar, contact Frances Steger at fsteger@sancaptrustco.com or 239-472-8300, as seating is limited.
Leave a Comment