A real estate investing venture is not just about location, but even other factors like life quality, cost of living, job opportunities, renting vs. owning, market stability, etc. Location of course is the first priority, but even the others count including taxes. If you are determined to invest in Destin Florida Real Estate then you are lucky to cash out many tax benefits. You can approach the local brokerage from distinflorida.com as well as check the sales listing homes and condos.
According to the prediction in 2019, the real estate market in Florida will be hot and home values will rise around 7%. Surprisingly, the home values in Destin have escalated to 26.1% in 2021. It is because of the multiple tax benefits accessible to smart investors along with the steady growth of Destin. The Sunshine State has a thriving economy, growth opportunities, and sunny beaches all year round. The accompanying tax advantages make it an appealing choice for real estate investing.
Tax benefits of real estate investment in Sunshine State Destin FL
No concerns about paying personal income tax
Seven states don’t impose personal income tax on the residents and Florida is one of them. Even individual cities impose city income taxes. Alternatively, California is a high tax state that levies 12% income taxes on its residents. When you plan to migrate to Florida then these considerable extra taxes will disappear.
Wealthy people having disposable income from across the US are investing in vacation homes to get away from the freezing winter season. The current COVID-19 situation has forced many New Yorkers to migrate to Florida.
Work from home is the new norm post-coronavirus, so people are taking interest in buying a home by the beaches in Florida for permanent stay and save on income taxes. Social security benefits, as well as retirement & pension plans, are also affected by income taxes, so moving to Florida will mean they will not be taxed. Florida is becoming a preferred choice for retirees.
No state tax on the capital gains
Capital gains are the difference between the initial home’s purchase price and subsequent sales price. The residents of Florida have to be concerned about Federal capital gains and if the purchased property is primary residence then the buyer is eligible for individual [$250,000] or Joint filing [$50,000] federal exemption. The condition is they need to have stayed there for a minimum of 2 years of past 5 years.
No estate tax
The estate tax is also called death tax and is levied when a deceased person leaves the estate to his/her beneficiary. In 2004, Florida eliminated the estate tax from its state. The property can be in the form of real estate, stocks, and cash. Estate tax and inheritance tax differ. Here the former talks about the entire estate while the latter is about an individual portion of the overall estate.
Opportunity zones
Opportunity zones were created to attract investors to rural regions in Florida. Real property investment in these zones helps in economic development, which would otherwise linger behind. If you choose a property in such zones then you can currently avoid paying capital gains temporarily on existing assets as well as permanent exemption from capital gain tax payment for owning properties in Opportunity zones for the last ten years.
Homestead exemption tax benefits
Under Homestead Exemption policy, a valid Florida resident received a $25,000 exemption on their primary residence. Property tax is paid but if the home is eligible for Homestead Exemption then from the first $50,000 assessed home $25,000 is exempted before calculating the tax. For example –
- If the home value is $49,000 then the first $25,000 is exempted from property taxes. You will need to pay taxes of the remaining $24,000 assessed value.
- If the home value is $72,000 then the first $25,000 is exempted from property taxes. The next $25,000 is normally taxed, while the remaining $22,000 will be exempted from property taxes except the school district tax.
- If the home value is $92,000 then the first $25,000 is exempted from property taxes. The next $25,000 is normally taxed, then the following $25,000 will be exempted from property taxes [except school district tax] and the remaining $17,000 will be taxed fully.
The homestead exemption benefit is it caps the property tax increases. Besides, it protects the home from creditors during the bankruptcy process.
Beyond tax benefits
Taxes are not the only reason to invest in Destin Florida vacation homes or condos. The advantages of investing in Destin outweigh the drawbacks.
General rental write-offs
In Florida, rental vacation homes are in demand. There are no signs of decline. There is a dramatic increase in the rental rates. Besides, real estate value appreciates and each dollar spent in rental property management is tax-deductible. You can write off the maintenance, cleaning, insurance, advertising, real estate taxes, and homeowner’s association fees.
Stable housing market
Tax benefits, low mortgage rates, low cost of living, job opportunities, tourism, etc. are helping Destin town to gradually grow. Home sales have increased and a listed property hardly stays for a month in the real estate market. It doesn’t matter if your purpose to buy a home is rental or ownership, you can benefit from multiple tax benefits mentioned above.
Fast-growing economy
Coronavirus lockdown has dampened the tourism sector. Some areas like Grayton Beach, Watersound, and Destin are still the go-to destination as soon as the pandemic eases. Buy a rental vacation home now and renovate it for vacationers…..a smart move!
Snowbirds are the solid demographic that migrates to Florida. The retiree too escapes to Florida in the cold, winter season. Therefore ‘Snowbird rentals’ are solid investments because it guarantees high revenue half the year. Retired tenants are excellent renters because they have a regular income, move less, and are at less risk for property damages.
Destin FL offers natural beauty, miles of beaches, a warm climate all year round, and endless things to enjoy. The local community is warm and you become a proud owner of a beachfront property that can bring in huge profit if you plan to sell in the future!