The New Federal Tax Law signed at the end of 2017 by president Trump has clearly created a new trend of Tax Refugees trying to escape the high taxes of northern cities, to the shiny and tax privileged Miami. The most affected ones are the wealthy property investors after the law reinforced a deduction for state and local property taxes at $10,000. However, this doesn’t mean that these buyers are in a rush for changing residency and moving out to Florida.
This story has been all over the news, with shocking headlines it might have been misinterpreted as a drastic and radical movement that was happening from one day to the other. Nevertheless, this is not precisely the reality.
It is true that Florida experienced the highest local migration after the law was approved. This population rose has been nothing else but beneficial to the state, as the job creation last year increase by 2.7%. On the contrary, New York, and Illinois were the two states with the highest population decrease last year.
While there has been an undeniable increase of U.S. buyers in Florida, and there is a lively interest of new buyer coming into this appealing market, there is no hurry from buyers to escape their hometowns.
Buyers are a little skeptical of investing in Miami real estate, as according to the industry pattern, the lowest peak hasn’t yet arrived. High-end buyers won’t make an unfavorable investment by speeding their residency change.
But as we all know, the key for a good investment is the planning, and the research of domestic buyers has started. A new trend has appeared, and clients are no longer asking for the popular areas in Miami, but they are going for luxury condos in more discreet sectors like Edgewater and Bal Harbour.
It might seem obvious, but for the luxury property buyers, their job is a relevant subject to think about when changing residency. The work-attachment to their home states makes the decision of moving even more laborious.
The commitment of moving into Florida needs to be taken seriously, as the government is extremely diligent for those who try to avoid the law by changing residency but staying in their hometown “unofficially”. Taking this risk could cause an average of $144,000 audit fine that would banish any tax advantage obtained.
Wise investors are taking their time to move to the South without scurrying around. The trend is a long term movement which is nothing but beneficial for the real estate market in Miami.