How You Save on Florida Taxes When Buying a Miami Condo

Beautiful Miami is the perfect place to settle down. Its robust job market, wonderful tourist attractions, and excellent weather make it popular with all demographics, including those seeking luxury properties to make their own.

As with anywhere, though, it’s crucial to do your financial research ahead of time before you get ready to sell your old home and head off to the Sunshine State. This includes understanding the benefits of Florida’s unique tax system, especially when it comes to condominiums. 

Today, we’ll explain the ways that you’ll save when purchasing a condo in the Magic City. 

You Won’t Pay Income Tax in Florida

First, let’s consider Florida as a whole to best understand why Miami is the perfect place to settle down. Forty-three states levy state income tax, but Florida is one of the seven that doesn’t, meaning that you only need to concern yourself with federal income taxes and state property taxes. This, in addition to the balmy weather, is why so many seniors decide to move here; those on a fixed income need as many reductions in their expenses as possible. 

As an added bonus for when you’re ready to sell your home, Florida also does not have state capital gains taxes because it doesn’t levy income tax. You’ll only need to pay federal capital gains taxes.

Condominiums Typically Have Lower Property Taxes

Condominiums have an abundance of benefits for homeowners, especially ultra-luxury properties like Dolce and Gabbana Residences in Miami. They’re placed in the most attractive areas of the city, having the best ocean views, and they have many amazing amenities included, such as a luxurious 44-foot-long swimming pool, a wide variety of first-class restaurants, bars, and fitness and wellness spaces.

One of the other benefits, however, is that they typically have lower property taxes than a single-family detached home. This is because the square footage is generally smaller, and the property taxes for communal areas are spread out among residences. For example, the taxes for a single-family home include the square footage of the yard and other attached areas, but condominiums don’t have this concern. You will be sharing the burden of the taxes with the other residents, keeping your bill low. 

Miami’s Median Property Tax Is Lower Than Other Major Florida Metros

Miami-Dade County has a lower tax rate than some of the other most attractive areas of Florida. The median property tax bill is $2,756. That is over $1,000 cheaper than Palm Beach County, which has a median property tax of $3,956. Depending on the size and price of your condominium, you may pay more than this, as the city’s real property tax rate is around 2.06%. However, there are multiple ways to lower your bill, including paying early to get discounts and using the property as your primary residence.

Miami Provides Multiple Exemptions to Reduce Your Tax Burden

Miami offers a very generous Homestead Exemption of $25,000 off the assessed value for those who intend to use their condo as their primary residence. This means that if your condo is worth $500,000, you would only need to pay taxes on $475,000 of the property value, shaving off hundreds of dollars. Miami is known for its luxurious oceanfront condos, and the Homestead Exemption makes owning property in this area even more desirable. The exemption is a great incentive for people to invest in a primary residence in Miami, allowing them to save money on property taxes and potentially lower their overall housing costs. This benefit, combined with the allure of Miami’s beautiful beaches and vibrant culture, makes it an attractive option for those looking to own property in a prime location.

Additionally, the city has a cap on the amount of property appreciation that can be assessed for tax purposes. The “Save Our Homes” law limits the increase in valuation to just 3%, so even if the real estate market flourishes in the second year of your ownership, you won’t see a huge increase in your taxes. 

It’s important to note that you need to apply for these exemptions if you are purchasing a pre-existing condominium – they aren’t automatic. You can inherit the previous owner’s Homestead Exemption for the first year, but you will then need to apply for it again in the second year of homeownership. You will then need to file the exemption by March 1st of the next year. 

Additionally, the “Save Our Homes” exemption will artificially reduce the property taxes for the first year, but selling the property triggers a reassessment. 

Paying Early Can Save You Money

Miami allows for significant discounts when you choose to pay ahead of time. For example, if you pay your taxes in November when they are due in March, you’ll get a cool 4% off the entire bill. This percentage decreases the closer you get to March, and there is no discount if you pay the month that your bill is due. 

These exemptions and discounts are a little-known perk of purchasing a condo in Miami, as many focus instead on the excellent quality of life available in the city. In addition to hosting many of the world’s most famous companies, like Microsoft and Amazon, and the close proximity to amazing recreational areas like Biscayne Bay and Everglades National Park, you’ll also enjoy no state income tax, exemptions for primary residences and lower bills for paying ahead. 

This, in conjunction with the lower bills for condominiums and the many amenities available when living the condo life, makes the Magic City a truly marvelous place to live.