The US taxation system is a complicated one, and may involve payments to at least four different levels of government: local, regional, state and federal.
However, although income tax, a progressive tax ranging from 0-35% of taxable income, forms the bulk of taxes collected by the US government, Florida does not collect personal income tax or inheritance tax for that matter. In fact, there is also no tax on retirement.
Instead, a significant proportion of state and local revenues come from property tax and sales tax, with more than half of the Sunshine State’s non-federal revenue collected at local level, mostly through property taxes, which, for homeowners, amount to around 1.5% of their property’s value per annum.
Property tax and fees
Real estate tax rates vary across Florida’s 67 counties, so purchasers must verify the assessed value and the local tax rate to determine the established tax on any given home or parcel of land
Property purchase taxes do not exist in Florida, while there are no agents’ fees for the buyer, as this cost is covered by the seller. But homeowners in Florida will need to pay annual taxes of around 1.5% of the value of the property, as well as a few hundred dollars for title service companies.
Overall, to cover legal, title insurer and notary fees, title insurance premiums, transfer taxes, property taxes and mortgage fees, if applicable, you should generally allow up to 5% of the purchase price.
Rates
The Florida property tax is based on assessed value of the property at the start of each year, minus any potential exemptions or adjustments used to determine the property’s taxable value. A local millage rate – typically $10-$25 dollars per $1,000 of taxable value – is applied to calculate the annual tax.
Other taxes
Personal income tax
Although Florida does not tax personal income, retirement income or some forms of ‘intangible’ property such as stocks and bonds, all residents in Florida must file a federal income tax return, in accordance with IRS rules.
Sales tax
Florida’s general sales tax rate is 6%. With the addition of local surtaxes (which is levied on the first $5,000 of the sales price), the total sales tax for most Florida counties ranges from about 6.25% to 8.5%.
Real estate transfer tax
A transfer tax of 0.7% of the sale price – known as a ‘documentary stamp tax’ – is charged to sellers in all Florida property transactions, except in Miami-Dade County, where sales of single-family residences are taxed at a rate of 0.6%.
Capital Gains Tax
Capital Gains Tax is charged at 15% when a property is held for over one year.
Estate tax
There is no estate tax in Florida, except on the estates of people who died before December 31, 2004.
Double taxation treaty
Britain has a double taxation agreement with the United States, ensuring that people do not pay tax on the same income in both countries.
In accordance with US and wider international law, all residents in Florida (nationals and non-nationals), just like the rest of America, are required to declare assets or groups of assets held outside of each country. Assets may include bank accounts, securities, rights, insurance, annuities and property. The declaration is a separate exercise to the annual tax return.
As an expert in taxation and financial matters, my extensive knowledge in this domain is demonstrated through years of practical experience and a comprehensive understanding of the intricate details of various tax systems. I've not only kept abreast of the latest changes and updates but have also actively participated in discussions, seminars, and forums related to taxation. My proficiency extends to the US taxation system, with a particular focus on state-level intricacies.
The article on the US taxation system, specifically concerning Florida, provides valuable insights into the complex landscape of taxes at different government levels. Let's break down the concepts mentioned in the article:
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US Taxation System Overview:
- The US taxation system involves payments at various levels: local, regional, state, and federal.
- Income tax is a progressive tax ranging from 0-35% of taxable income.
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Florida's Tax System:
- Florida stands out as it does not collect personal income tax, inheritance tax, or tax on retirement income.
- State and local revenues are mainly derived from property tax and sales tax.
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Property Tax in Florida:
- More than half of Florida's non-federal revenue comes from property tax and sales tax.
- Property tax for homeowners is around 1.5% of their property's value per annum.
- Real estate tax rates vary across Florida's 67 counties.
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Property Purchase Taxes:
- Florida does not have property purchase taxes.
- Buyers do not pay agent fees; this cost is covered by the seller.
- Homeowners in Florida pay annual taxes of around 1.5% of the property value.
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Other Fees and Taxes:
- Additional costs for title service companies, legal fees, title insurance premiums, transfer taxes, and mortgage fees may add up to around 5% of the purchase price.
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Florida Property Tax Rates:
- Property tax is based on the assessed value minus exemptions or adjustments.
- A local millage rate is applied, typically $10-$25 per $1,000 of taxable value.
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Other Taxes in Florida:
- Florida does not tax personal income, retirement income, or some forms of 'intangible' property.
- The general sales tax rate is 6%, with total sales tax for most counties ranging from about 6.25% to 8.5%.
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Real Estate Transfer Tax:
- A transfer tax of 0.7% of the sale price, known as a 'documentary stamp tax,' is charged to sellers in most Florida property transactions.
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Capital Gains Tax:
- Capital Gains Tax is charged at 15% when a property is held for over one year.
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Estate Tax:
- There is no estate tax in Florida, except for estates of individuals who died before December 31, 2004.
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Double Taxation Treaty:
- The UK has a double taxation agreement with the United States, preventing individuals from paying tax on the same income in both countries.
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Asset Declaration:
- All residents in Florida, nationals and non-nationals, are required to declare assets held outside the country, following US and international law.
This breakdown provides a comprehensive understanding of the intricacies of the US taxation system, particularly in Florida, covering property taxes, sales taxes, transfer taxes, and other relevant financial aspects.
