Different states have certain legal advantages and pitfalls to owning a home and business. For example, New York has the highest property tax rate in the country, which may deter novice real estate investors from doing business there. And California has the highest state taxes, which might make living and working there unaffordable.
Many people look to Florida as a state to buy and home and run a business because there are certain benefits to doing so. However, before you pick up and move here, it’s important that you understand the associated legal pros and cons.
Pros of Owning a Home in Florida
No Estate Tax
Estate tax is not-so-affectionally referred to as the “death tax.” It taxes you owe when you inherit property from someone who has passed away. Florida eliminated estate taxes in 2005.
Every Florida homeowner receives a homestead exemption of $50,000 on property taxes, which decreases your home’s taxable value.
Florida has one of the strongest real estate markets in the United States. The population is consistently growing, and people move here from all over the world, many of whom prefer renting over buying.
Cons of Owning a Home in Florida
Florida is hot and humid. While that means the weather is nice and warm for most of the year, that also means you need air conditioning, a lawn mower, hedge trimmers, and possibly pool equipment – all of which can get expensive to operate and maintain.
Possible Recession Looming
Financial experts are predicting an incoming recession. This means that property values could decrease in Florida. While this might be bad for current homeowners, it could be good for people looking to buy in Florida soon.
Pros of Operating a Business in Florida
Relatively Simple to Set Up
Filing an LLC in Florida is pretty quick and easy. There is a three-step process on the Florida state website that you can complete today!
No Income Tax
Florida is one of nine states that don’t collect income tax. Individuals and LLC owners do not have to pay any state taxes when they file. However, corporation owners are subject to a 5.5% income tax rate.
Some states don’t allow single-member LLCs and require two or more people to organize a business. However, Florida permits any sole person to form and operate a business.
Cons of Operating a Business in Florida
Difficult to Transfer Ownership
LLC owners must notate in the operating agreement that their business can be transferred to another person. Otherwise, a family member or business partner can never claim ownership.
Limited Case Law
Compared to traditional partnerships and corporations, LLCs are new concepts. As such, there aren’t as many legal precedents, and handling disputes can be difficult
Owning a home and business in Florida has advantages and disadvantages. Contact a real estate and business lawyer to help you decide if moving here is the best decision for you.
A.K. Esquire is an experienced law firm in Fort Lauderdale. We are prepared to support business owners in South Florida with the best legal support around. Contact us today for more information about our services.