There are many significant benefits to enjoy when you invest in real estate, whether you live on your property or choose to rent it out for profit. Investing in homes for sale in Leesburg, Florida, and many of the state’s other cities could have some particular benefits — specifically relating to taxes.
Why You Should Invest in Homes for Sale in Leesburg, Florida, and Other Florida Cities
Property taxes and income taxes can be major deterrents for potential real estate investors. If you relate to this concern, you should consider Leesburg, Florida, real estate for your next investment. Here are three of the most desirable tax benefits that property owners in Florida can take advantage of based on the state’s laws.
1. No Personal State Income Tax
There are only seven states in the U.S. that do not impose income tax on residents, and Florida is one of them. Additionally, Florida’s cities do not tax income on the individual city level, which means Florida residents are completely free of income tax.
Therefore, it’s no wonder Florida is such a great state in which to live and invest in property. Though property tax does still exist in Florida, the lack of income tax brings down the cost of living in the state significantly.
2. Opportunity Zones
2017’s Tax Cuts and Jobs Act made many significant changes to the way the U.S. collects federal taxes. In Florida specifically, this act brought about the creation of Opportunity Zones — specific areas of the state in which investors can earn additional benefits — in order to drive investors to these areas and increase local property values.
When investors buy properties in Opportunity Zones, some of the benefits include deferment of capital gains taxes or even exemption from capital gains taxes entirely after owning the property for a certain amount of time.
3. Homestead Property Tax Exemptions
If you are planning to invest in a Florida property not to rent to tenants but rather to make your home there, you can benefit from the Homestead Exemption Act in Florida. This act is designed to incentivize residency in the state and limit out-of-state property ownership.
Under the Homestead Exemption Act, Florida residents can have the assessed value of their property reduced by as much as $25,000 before property taxes are calculated. This means that their property taxes will be much lower than they typically would be based on the home’s value alone.
Additionally, the act puts a cap on property tax increases for qualified homeowners and protects homes from creditors in the event of bankruptcy.
The Housing Market in Florida Is Growing
Aside from the tax-specific benefits of owning property in Florida, the state offers a stable housing market as well as a constantly growing rental market so all kinds of homeowners can feel great about their investments. Ask your realtor if investing in a Florida property might be right for you.
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