From FloridaRealtor.org
Cold and snow aren’t the only reason hordes of people want to become Florida residents.
Escalating taxes in other states are driving them to the welcoming arms of the low-tax Sunshine State, too.
But people who are well off, or only part-time residents, are often shocked to discover that just because they consider themselves Florida residents, their former states disagree.
In many cases, these states are going after residents they think should still be paying their taxes. And the states are winning.
National Basketball Association referee Ken Mauer Jr. discovered that last year when the Minnesota Supreme Court ruled against his claims of Florida residence in 2003 and 2004, after a dispute that lasted more than a decade.
According to the court, St. Paul native Mauer bought a townhouse in Fort Myers on July 1, 2003. That same day, he obtained a Florida driver’s license and registered to vote in the state. Later that year, he made a declaration of domicile in the state and filed for a homestead exemption. And he asked a Florida-based tax consultant to help him with Florida tax issues.
But travel logs he kept showed he was not in Florida for the required six months and a day, the court found. The fact that he held on to a 10,600-square-foot home he’d built in Afton, Minn., used a Minnesota bank account, and kept three out of his four cars in the state, were among the signs the court pointed to when it said he didn’t prove he really became a Florida resident.
Mauer, 58, declined to discuss the specifics of his case on his attorney’s advice, which has cost him thousands in back taxes, interest and legal fees.
“It’s been horrible for my wife and me,” he said. “I wouldn’t wish this on anyone.”
Despite the risk of an audit, or worse, more wealthier people than ever before are trying to establish residency in Florida because of its indisputable tax benefits, Naples wealth manager Soren Christensen said.
He’s seen double the number of clients looking to become Florida residents than he did last year, all trying to escape rising tax burdens in their home states.
“One of the first questions clients ask us is should they domicile in Florida,” he said. “And frankly, they’d be crazy not to.”
Florida is undeniably attractive from a tax standpoint. In terms of having a favorable tax climate, it ranks first in the nation for individual income tax; sixth for unemployment insurance tax, 13th for corporate tax; 16th for property tax and 18th for sales tax, according to the Tax Foundation’s 2014 State Business Tax Climate Index.
Overall, it ranks fifth as the best state to live and do business from a tax standpoint, the foundation found, after Wyoming, South Dakota, Nevada and Alaska.
The foundation found the heaviest tax burdens are generally in northern states, including New York, New Jersey, Rhode Island, Vermont and Connecticut, and Maryland, as well as some Midwestern ones like Minnesota and Wisconsin.