2021 Tax Benefits for Florida Homeowners
Homeownership in Florida is booming, with people moving across the country to enjoy the benefits of living in the Sunshine State. Many of these new residents are coming from states with high income and property taxes, taking advantage of Florida’s lack of state income tax and other taxes that are close to the national average. But the savings don’t end there! Let’s dive into the other tax benefits that Florida homeownership offers.
Deduct Your Property Taxes
First off, your Florida property taxes can have an effect on your federal income tax. You can deduct state taxes on your tax return, up to a total of $10,000 ($5,000 if married filing separately). The IRS lists state property taxes as one of the qualifying taxes, which will lower your overall income taxes.
Mortgage Interest Exemption
You can also reduce your taxable income by claiming the interest you pay on your mortgage as a deduction. This is only applicable to your primary residence or secondary home and deals with loans used to buy, build, or improve your home. There are also limits to the mortgage values this applies to: $750,000 for joint files and $375,000 for single files. If your home was purchased before December 15, 2017, that limit goes up to $1 million.
Florida also has a Mortgage Credit Certificate (MCC) Program that lets homeowners claim up to half of their mortgage interest as a tax credit. This means your mortgage interest payments, up to the cap of $2,000, will count toward your taxes. This won’t be able to net you a refund, but it will reduce what you owe.
Exemptions for Health-Related Home Improvements
When you make health or accessibility upgrades to your Florida home, you may be eligible for some tax exemptions! These include improvements like ramps, sit-in showers, grab bars, or height adjustments. The cost of your upgrades minus 7.5% of your adjusted gross income can be deducted. You might have to factor in whether these upgrades increase your home’s value; if they do, you’ll be able to deduct the difference between your expenses and the increase in value.
Huge Exemptions for Limited-Income Seniors
Florida is known as being the ideal state for retirees and this tax exemption is the icing on the cake. Homeowners that are 65+ may qualify for up to 100% property tax exemptions. This applies to homes in certain areas of Florida that are valued at less than $250,000. Seniors must also be under an income cap that’s increased every year. In 2020, that income limit was $20,000, so this program is ideal for retirees.
Benefits for Military Members and Families
There are a number of tax benefits for military members and their families that are residing in Florida. First off, additions to Florida’s homestead exemption are specifically applied to service members who were deployed during the previous calendar year. Meanwhile, the Fallen Heroes Act extends additional homestead exemptions to surviving spouses of service members or first responders. Likewise, veterans over 65 who sustained an injury during their service might qualify for additional tax exemptions.
Bonus Savings: Early Payment
And finally, Florida is willing to cut you some slack when you pay a little early. According to the Sarasota Tax Collector, you can save up to 4% if you pay the November before your taxes are due. The discount drops by 1% each month as tax day approaches, so act fast to take advantage of this discount!
Ready to Get Started?
These tax benefits are just one of a variety of reasons people love living in Florida. With ideal weather, day-trip vacation spots, and a low cost of living, more and more people are deciding that Florida life is for them. Red Door Homes can assist you with everything from finding land to building your dream home. We’ve got the expertise and affordability to get you the ideal Florida home. Contact us today to learn more!