As 2018 draws to a close, the annual “head south” migration isn’t just for ducks, geese and the featherless northeastern snowbirds who roost in Florida during the winter months. Thanks to new tax laws in effect that have changed the way people are arranging their future finances, many of those flocking south are looking at nesting past the spring next year. Lawyers, financial experts and even real estate industry leaders in Florida and the northeast are making plans now for the anticipated migration of people seeking lower taxes and making Florida their primary residence.
“So many of our clients who have created successful businesses and raised beautiful families in the northeast already have second homes in Florida and other non-income states,” said Mark Germain, Founder and CEO of Beacon Wealth Management, a fiduciary, fee-based registered investment advisory (RIA) firm based in Hackensack, NJ. “Since so many highly populated states in the northeast now have higher brackets for both income and property taxes, residents of New England are expected to fly south to call non-income tax states such as Florida their primary residence in order to watch their taxes go down.”
Germain and his team recently hosted a roundtable for clients wanting to maximize their tax deductions. According to Germain, state and local deductions in many northeastern states will be limited to $10,000 in property and income taxes except for taxes incurred in a trade or business. Mortgage interest deduction is now limited to $750,000.
“The tipping point here is for families with combined incomes above $250,000,” continued Germain. “Many of these empty-nesters are starting their retirement plans and considering travel to children and grandchildren in other parts of the country. If they can find ways to speed up their succession plan or headquarter their business in Florida to have an outstanding quality of life and a sunny home base that provides lower taxes, it’s worth a thoughtful conversation with trusted advisors.”
Pauline Chen, a 69-year-old Beacon client and resident of West Palm Beach, Florida, contracted to purchase a home in Florida in 2012 to spend the colder months and return to New York for the rest of the year.
“I found that I enjoyed the more relaxed lifestyle, the ease in participating in a wide range of activities, and the company of many new friends,” said Chen. “I found myself increasingly spending more than the winter months in Florida. Add the bonus of a lower cost of living, no state and city income taxes, significantly lower property taxes and the financial incentives to make Florida my primary residence were too great to ignore. This was not a prescient decision on my part, but I am overjoyed with my decision given the new tax law!”
Realtors in Palm Beach County say they are already seeing the changes with residents of northern states, primarily New York, establishing permanent residency locally, and that could change real estate in South Florida. “Florida is like Maine where all the development is on the coast,” said Lee Weisberg of The Weisberg Group realtors in Palm Beach Gardens, “so we’re going to see more development head inland. We will also see an influx of commercial investments here.”
In Florida, Steve Mathison’s law firm is working closely with clients in the northeast and collaborating with firms like Beacon Wealth Management to make the relocation transition a smooth and wise choice.
“South Florida real estate and estate planning attorneys are ready to welcome our northeastern friends with open arms,” said Mathison, Managing Partner of Mathison Whittles, LLP, afull-service, Florida-based law firm that pairs the talents of its two founders to efficiently and cost-effectively provide clients the entire spectrum of real estate, title insurance business, estate planning and litigation legal services. “Our real estate and title insurance model is to provide services at the same price as a “title company” and to include legal representation at no additional cost.”
The Florida native knows his Palm Beach County real estate and built the firm’s platform with projects such as The Gardens Mall, PGA Commons, BallenIsles Country Club, Frenchman’s Creek Country Club and many others. His current projects will have a huge impact on northern Palm Beach County in the year ahead and include the redevelopment of Downtown at the Gardens; Avenir, a multi-use development planned for Palm Beach Gardens; and Riverwalk Pointe at Mangrove Bay, a luxurious active adult community in Jupiter. Mathison Whittles also provides title and closing services as well as real estate planning, all for an agree upon set fee which creates continuity for clients and their advisors.
“Locally, Floridians need to be ready for home prices to go up because of higher demand, especially in country club communities and beachfront condos,” continued Mathison. “We may have to get creative in the redevelopment of existing neighborhoods to make sure there is room for everyone here in the Sunshine State, but it will definitely be a big boon to our economy.”
According to Germain, the new tax laws have him thinking about the future as well. He has a Palm Beach County office located in Palm Beach Gardens. For more information on Beacon Wealth Management, call 201.447.9500 or visit www.beaconwealthmanagement.com.
To obtain more information on Mathison Whittles, LLP or a quote for real estate, title insurance or estate planning services call 561.624.2001. or visit the firm’s website,www.mathisonwhittles.com.