South Florida Tax Breaks For Homeowners
Whether you already live in South Florida or you’re planning a move, there are plenty of reasons to love this beautiful part of the country.
One thing that makes this area so appealing is the many tax breaks available.
Read on to find out more about how you can not just enjoy the beautiful weather of South Florida, but also some of the tax breaks, too.
Homestead exemptions vary by state and even by city or county, but South Florida residents get this benefit much more easily than others. People who became homeowners in 2019 and those who sold their homes or turned them into rentals may quality.
New homeowners in the Miami-Dade County area are eligible, as well as up to 413,000 other existing homeowners. Florida law states that all homeowners can claim up to a $50,000 homestead exemption. This exemption must be on your primary residence.
Property owners may file for an exemption online. Just make sure that you always notify your jurisdiction of any change in status, or you could be on the hook for back taxes.
Homestead exemptions are designed to give homeowners a break from paying property taxes. If you qualify, it can save you quite a bit of money in the future.
South Florida Real Estate Tax Deductions
In Florida, state and local real estate taxes are deductible whether they’re paid via escrow or as part of your regular mortgage payment. In this state, most homeowners pay their real estate taxes “bundled into” the mortgage itself. You may also deduct them if you pay the taxes directly to your local tax authority.
Those who purchased a new home in South Florida in 2019 may deduct real estate taxes that were paid at closing. This amount is not included on the standard IRS 1098 form, so make sure you get a copy of your closing statement so you can refer to it during tax season.
The total amount you can deduct for state and local taxes (real estate included) is limited to $10,000 or $5,000 if you’re filing as “married filing separately.” Those in the military who receive a housing allowance that isn’t taxable can also deduct their real estate taxes without reducing the deduction amount by a nontaxable allowance.
Capital Gains Tax Breaks
Anyone who sold a home for more than they paid, or for more than the “basis” value of the home, the difference is called a capital gain. This profit must be reported on your taxes. If the home you sold was your primary residence for at least two of the five years before you sold it, you can exclude up to $250,000 of profit for a single filer and up to $500,000 of profit if filing jointly.
This tax break means that most Floridians including those in South Florida won’t be taxed on the profits from their home sale. If you need to find out whether you had a capital gain or loss, you can calculate the basis.
The basis includes a few different factors including the original purchase price, specific closing costs paid, and specific improvements made to the home while you owned it. It also includes depreciation and/or casualty losses, so talk to your tax or financial advisor and find out more before you file.
Mortgage Insurance Premiums
The itemized deductions for mortgage insurance premiums (PMI, MIP, and VA funding fees) has now been reinstated by Congress after it expired during the 2018 tax year. Now, you can deduct this premium on your income tax returns moving forward.
Additionally, homeowners who owned a home during 2018 may be able to amend their return and include the mortgage insurance premium deduction. It’s important to note that your mortgage must have originated since January 1, 2007, in order for the mortgage insurance to be fully deductible.
Another “rule” set forth by the IRS is that your Adjusted Gross Income (AGI) must be $100,000 or less if filing jointly or $50,000 or less if you’re married and filing separately. The reduction is reduced for people with higher incomes that exceed these numbers and completely eliminated for those with AGIs higher than $109,000 or $54,500 for those married filing separately.
While the mortgage insurance premium deductible applies to taxpayers and homeowners nationwide, it’s another perk you can include. Living in South Florida means that you can add this to the many other tax breaks you’ll get by owning property here.
While there are many home-related tax breaks in Florida, there are some other tax benefits, too. For example, Florida is just one of a handful of states that has no income tax. This can be a huge money-saver, particularly for young professionals.
Florida also has something called a “Save Our Homes” cap on annual assessments, which is set at 3% or the change in the consumer price index, whichever is less. This index is a comparison of prices paid by most urban Americans for goods and services.
With the Save Our Homes Cap, the assessed value of your home for property tax purposes cannot increase each year by more than the change in the CPI. It also cannot increase if the change in the CPI is more than 3%.
The Perks of Florida Living
Beautiful weather, amazing beaches, and recreational activities are just some of the perks of South Florida living. With an abundance of tax breaks and other incentives, it’s easy to see why so many people have made this place their home.
If you’re interested in new construction in this area, be sure to visit our website and contact us today to find out more.