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How to Become a Florida Resident for Tax Reasons, Homestead and Asset Protection

Florida is an attractive state to retire, not just because of the warm weather but also because of its favorable state government policies. In Florida, there is no state income or estate/inheritance tax, it has liberal asset protection measures to protect one’s property from creditors, and a debtor’s principal place of residence is generally exempt from creditors. For these reasons, especially now with remote working becoming a norm, many individuals want to know how to become a Florida resident.

It is important to note that just because you read something on the internet, even on our website, it does not mean that you interpret it correctly, or that your state’s or Florida’s authorities will agree. So always consult an attorney and an accountant in Florida and in your state, if applicable, before filing (or not filing) income tax returns or making other financial and legal decisions.

Florida resident requirements

How to become a Florida resident depends on what kind of resident you want to be. Different requirements are required for purposes of being a tax resident, as opposed to a resident in order to avail of the asset protection laws. Generally, however, in order to establish residence, one must demonstrate an intent to make Florida his true, fixed, and permanent home, and whenever absent from Florida, shows an intention of returning. Forida Statute § 196.012.

How to become a Florida tax resident

If you want to eliminate paying state income tax, you need to know how to become a Florida tax resident. To be a tax resident in Florida, one must stay majority of the year in Florida. If a year has 365 days, then the stay in Florida should be 183 days. This does not need to be consecutive, but should be an aggregate stay of 183 days in Florida for the taxable year.

Aside from staying in Florida for 183 days, the following procedures should also be observed in order to abandon the previous tax domicile and establish the new tax domicile in Florida. First, file a final income tax return in the previous tax domicile. If one is moving mid-year, two tax returns have to be filed: in the previous state and the new state. Generally, a part-year resident return is filed, and in that return, there is a section where one can indicate whether their period of residency is ending within the year. This will notify the tax authorities that one intends to change his residence. If the state has a change of address form, this also has to be filled out.

After making the move, file all future federal income tax returns using the Florida address. If one is still earning income from the previous state tax domicile after the change of residence, file a nonresident income tax return in that state.

These actions will demonstrate an intent to abandon the previous tax domicile and to establish Florida as the new tax residence.

How to possibly become a Florida resident for asset protection

To avail of Florida’s liberal asset protection laws, there is no specific period of stay in Florida required. In fact, physical presence is not a requirement, but an intention to make Florida the permanent home. You can be a Florida resident on your first day in Florida, for as long as you can demonstrate an intention to abandon the previous domicile and to establish Florida as your new domicile.

However, under Florida Statute § 222.17, in order to avail of the homestead exemption where your principal place of residence can be exempt from creditors’ claims, a sworn statement, called Declaration of Domicile, should be filed in the office of the clerk of the circuit court in the county where you reside, stating that you reside and maintain a place of residence in that county which you recognize as your permanent home.

Once this Declaration of Domicile is filed, your house in Florida is exempted from forced sale or lien under any process of the court under Article X, Section 4 of the Florida Constitution, except for: (a) voluntary liens such as mortgages or home equity loans; (b) contractor and mechanic’s liens; (c) property taxes, homeowner association dues and special assessments; and (d) IRS tax liens. This is a very strong exemption because it is based on the state constitution.

In fact, even after a money judgment is issued, debtors can still invest their money in a Florida home, and this Florida home will still be considered exempt. A move to Florida is also permissible to protect one’s assets, even after a creditor has filed a lawsuit. However, if another state court has issued an injunction against the transfer of assets, the move to Florida in order to transfer and protect one’s assets can be questioned.

Other actions to demonstrate intent to establish Florida as permanent residence

Aside from above, if you want to remove all doubt that you have become a Florida resident, the following actions should be undertaken:

  • Get a Florida driver’s license.
  • Register and insure the vehicles in Florida.
  • Register to vote in Florida.
  • Change all known contact addresses to the Florida address (utilities, phone bills, federal tax returns, credit cards, passport, insurance, income/pension/dividend checks, etc.)
  • Engage Florida professionals (doctors, accountants, lawyers).
  • Move the money to Florida banks.
  • Update estate plan as Florida resident.
  • Work in Florida.
  • Enroll in club memberships and join religious affiliations.

Establishing Florida residence depends on a case-to-case basis because intent is the most important part in order to avail of Florida’s asset protection laws. Should you wish to become a Florida resident or need any kind of legal assistance in Florida, we, at the Law Offices of Albert Goodwin, are here for you. You can call us at 718-509-9774 or send us an email at attorneyalbertgoodwin@gmail.com.