JOHNSTOWN —
So, you’re tired of winter and you want to move to Florida. What are some things you need to know?
Maybe one of the most important is that Florida has no “death tax.” In Pennsylvania, we have an inheritance tax. The rate changes depending on to whom you leave your money. Spouses are free. Children are taxed 4½ percent of the value of all assets, real estate included. Life insurance is not taxed.
Brothers and sisters of the decedent who inherit are taxed at the 12 percent rate. They must have at least one parent in common with the decedent. Everybody else (nephews, nieces, aunts, uncles, boyfriends, etc.) is taxed at 15 percent.
I have found people spend a lot of time worrying about the inheritance tax. Go to Florida. It has no inheritance tax. It does have the federal “estate tax.” But, that’s a national tax that applies to the estates of everybody no matter where you live. Since the “feds” don’t tax the first $1 million of assets, most of us don’t have to worry.
The federal government does, however, tax life insurance.
Florida has no income tax. Florida’s constitution forbids it. Pennsylvania’s income tax rate is 3.07 percent. That’s $153.50 on $50,000.
So, how do you get these tax advantages? Well, you have to establish Florida as your domicile. Domicile and residence do not mean the same thing. You might have many residences, but you have only one domicile. It’s a matter of intent as to where you want your home base to be. Here are some suggestions on how to demonstrate your intent:
First, file a declaration of domicile in the Florida county in which you reside. Second, get a Florida driver’s license. Third, register to vote. Fourth, register your automobile and get a Florida license plate, and then apply for a homestead exemption. The homestead exemption exempts $25,000 of value from the assessed value of your house.
There are a few more things to do to show your intention of domicile: File your federal income tax in Florida; spend as much time in Florida as is practical (there is no hard and fast rule that says it must be six months, but the more the better); use a Florida bank; maintain a safe deposit box in Florida; transact business in Florida; change your address on all credit cards, charge accounts, etc.; establish affiliations with social and religious organizations in Florida; when registering in hotels, state that you are a Florida resident; and hire a Florida attorney. I put that last suggestion in only to help the Florida bar as a whole. I am not licensed to practice law in Florida.
Please be advised that while this article may sound like I am a member of the Florida Chamber of Commerce, I was born in Ebensburg, I am a lifelong Pennsylvanian and not likely to change my domicile.
Thomas Young, a graduate of Pitt and Harvard Law School, has been a lawyer in Johnstown since 1958. He is a former professor of business law at Pitt-Johnstown. Readers may send questions to Young in care of The Tribune-Democrat. The opinions expressed in this column are general in nature and may not apply to your situation. Consult your attorney for advice on specific legal matters.
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