Posted on Sunday, January 22, 2012
In most writings these days you will read about real estate driving the economy but in some cases it is the other way around – by that I mean a sure economic footing can be a plus for real estate. Don’t just ask me about it, talk to buyers looking at Florida property and listen to some of their questions.
Let’s start with some buyers I spoke with last week – from Canada and the northern states. They asked questions like “what are taxes here – both income and real estate”? “Tell me about the State of Florida government and its fiscal policy.” These are all good questions and the reasons for these questions are obvious – some states and some countries for that matter have different economic underpinnings which are not working out so well. If you have your choice of vacation property locations you may chose the location on the best economic footing.
Most buyers know Florida has no personal income tax for qualified Florida residents. This policy which leans heavily on sales tax gives some of our buyers a nice raise if they can establish residency here. I heard it put this way once – may of us think money managers charge a lot to manage our money, some taking a 100 basis points of the profits. Imagine taking 600+ basis points of your profits – that would be equal to some state income taxes or worse.
But there is more to Florida’s economic footing than the absence of state income taxes. What may not be as well known is our typical city and county property tax on Naples real estate is something like 1.18%. That will raise eyebrows from someone up north. Due the math and in some cases thousands can be saved. In addition we have homesteading – which we sometimes describe to northerners as a lot like rent control – a qualified homeowner can limit real estate tax increases on a primary residence for the life of the owner – if you have established residency here and qualify.
We also have some restrictions on what cities may tax. Some Florida residents may not even know this one – the maximum real estate tax a Florida city may charge is 10 mils – if the city cannot balance the books at these levels the state my pull the city charter and poof no more city – or a reconstituted one. And yes the state really has pulled the charter of cities not performing well.
Now that is an economic footing. Folks from up north with high property taxes and high state income taxes and questionable state and municipal borrowing levels may find Florida’s economic footing appealing and a plus for Naples real estate. Maybe this is one more reason why so many northerners bring their hard earned money down here and buy real estate.
After growing up and working a lot of years in older northern cities I am really impressed with Florida’s economic footing. Our buyers like to hear about these policies and I think the policies help provide a degree of comfort to property buyers. Sure we have a ways to go and I truly feel for the unemployed (we need some improvement here!) but I like our chances with this economic structure.
No legal or investment advice or suggestions are being given in this Blog. Actual real estate price and sales results are subject to market forces and are not completely predictable. Please consult a lawyer or investment advisor for such legal and investment advice. The writings of this Blog are intended for the sole use of our clients.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Mark Goebel, PA
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