Real estate agents across Palm Beach County are busier than ever, with an influx of new clients hailing from New York to South Florida to escape the Big Apple’s blistering weather, raging traffic, and burdening taxes. According to the 2017 U.S. Consensus Bureau, 63,772 New Yorkers left the Big Apple for the Sunshine State. Florida’s tropical climate, low taxes, beautiful beaches, and championship golf courses are enticing elements for a wide demographic.
More than 566,000 people pack their belongings and flock to Florida each year. Property values continue to increase, and the luxurious lifestyle, which is reminiscent of a resort, continues to flourish. With a shaky stock market and uncertain pandemic, individuals and families feel secure investing in Florida real estate. After all, what better place to call and stay home? Here are few reasons why now is the best time to buy a Florida home:
Low Interest Rates
In light of the economic strain due to COVID-19, the Federal Reserve is slashing interest rates a full percentage point to zero and is giving banks more lending power. As a result, potential homebuyers have the opportunity to secure an incredibly advantageous home loan. Financial experts assume the reduced interest rate will continue until the economy rebounds amid the current circumstances; however, no one can predict how long rates will remain this low.
1609 E Hemingway Drive, Juno Beach
No Income Tax
While other states mandate an income tax between four and eight percent, Florida residents pay zilch, nada, zero. For this reason, the state is an attractive location for business tycoons, celebrities, professional athletes, small business owners and employees. As an example, individuals who earn $200,000 a year save more than $12,000 per year in taxes!
120 Sandpiper Circle, Jupiter
No Estate Tax
Also known as a “death tax,” the state of Florida does not posthumously tax its residents. In other states, families of deceased loved ones are forced to pay taxes on their assets, including property. For New Yorkers, the estate tax is as high as 16% for properties worth more than $10 million and gradually decreases to 3.6% for properties closer to the $5 million mark.
By comparison, the state of Connecticut has a death tax ranging between 7.2% and 12.2% on all properties valued above $2 million. For bereaved families, this complex tax only complicates an already difficult situation. Fortunately, Florida is one of the 38 states that does not levy a post-mortem tax.
8580 Egret Lakes Lane, West Palm Beach
Reasonable Property Tax
Property tax percentages vary by county, but the average rate for the state is only .98%, a tad lower than the national average. However, in Palm Beach County, the tax rate is $4.78 for every $1,000 in taxable value, a rate that has not changed in seven years.
Commissioners recently toyed with the idea of reducing the tax rate since the increase in home values has generated considerably more revenue for county coffers; instead, representatives agreed to keep the flat fee which means no change for primary homeowners but a sizable increase for second homeowners.
Florida, and specifically Palm Beach County, does offer several exemptions and benefits for property owners.
- Homestead: Historically, homestead exemptions date back to the 19th century as a way to protect home values against rising property taxes, prevent creditors from claiming a home, and provide widows or widowers the financial ability to keep the same residence. In Florida, homeowners are eligible for homestead exemptions no matter the price of the home. Presently, property owners receive an automatic $25,000 exemption applied to the first $50,000 of the home value and then another $25,000 exemption if the assessed value is between $50,000 and $75,000. Owners may rent their homes out for 30 days or less and still receive this benefit; however, rentals lasting longer than 30 days do not qualify for homestead status.
- Save Our Homes (SOH) Cap: In an effort to combat increasing property values, the Florida legislature amended the state constitution so that homes may not increase more than 3% each year for property tax purposes. The SOH Cap ensures that homeowners are able to continue to afford their residence and not be “taxed” out of their community. Should the fair market value be less than the 3 percent cap, the appraiser will utilize the lowest assessment. If the owner sells the home, the property is reassessed and the 3% cap cycle starts over with the new price point. Non-homestead properties receive an automatic SOH Cap of 10%, which means that the home’s assessment value can not increase by more than 10% each year. While this figure may seem high, many cities within Palm Beach County had taxable valuations that exceeded the 10% mark.
- Early Bird Specials: Just like the discounted happy hour prices at local breweries and pubs, the Palm Beach County Tax Collector Office offers an incentive for property owners who pay their taxes early. Homeowners who submit payment by November 1st get a 4% discount; by December 1st a 3% discount; by January 1st a 2% discount; and by February 1st a 1% discount. In order to receive this generous discount, the entire tax bill must be satisfied in one payment.
- Special Exemptions: Apart from homestead, other Palm Beach County property exemptions are available for individuals, families, veterans, active military, law enforcement, first responders, and various institutions. Senior citizens with a limited income (currently less than $30,000) are able to apply for additional exemptions ranging from $5,000 to $50,000 depending on the municipality. Similarly, civilians with permanent disabilities receive credits ranging from $500 to full exemption status. Active duty military, veterans, and veterans wounded in combat are also all eligible for varying tax discounts. To assist families, homeowners who build a “granny flat” on their property to accommodate their parents or grandparents are granted a separate exemption. Finally, institutions or non-profits that use the property for charitable, religious, or educational purposes are given a reduction.
Of course, saving money via low interest rates and tax exemptions is desirable, but Florida real estate has several other alluring attributes. These include the white sand beaches, turquoise blue water, championship golf courses, premier tennis facilities, world renowned fishing spots, and remarkable recreational fields.
Families and active seniors appreciate the county’s commitment to updated, and often envied, sports complexes and fields. From baseball, soccer, football, and lacrosse to pickleball, tennis, swim, and croquet, Palm Beach County has top-notch playing fields and facilities. The region also features miles of biking trails, highly ranked public and private golf courses, and cultural venues such as the Kravis Center, Jupiter Maltz Theater, and the Eissey Theater.
Saltwater recreation, resort-style amenities, tax-friendly incentives, and a luxurious lifestyle all contribute to the steady increase in Palm Beach real estate investments. To tour available properties, contact a NV real estate professional today!