South Florida Mansion Sales Surge as Tax Exiles Seek Savings
(Bloomberg) -- For the past year, Florida real estate agents have been actively courting wealthy Northeasterners who took a hit from the Trump administration’s tax overhaul. Now signs are emerging that some of those disgruntled taxpayers are indeed jumping at the chance to cut their tax bill by moving to Florida.
Luxury sales are slowing across the country, from New York to California, but they’re rising in South Florida. Million-dollar home sales in the fourth quarter jumped 7.5 percent from a year earlier in Miami-Dade County, 17 percent in Broward County and 15 percent in Palm Beach County. In Fort Lauderdale, the median price for a luxury condo jumped 26 percent to almost $1.6 million, according to data on the top 10 percent of sales released today by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
Donald Trump’s tax overhaul got Bloomington, Illinois, executive Jim Morris looking at South Florida for a $10 million-plus mansion with his own piece of beach, low property levies and no state income tax.
“It’s not just the weather,” he said. “The advantages of the tax code are greatly appreciated.”
While the tax advantages of relocating to Florida vary depending on income and where the people are moving from, residents of high-tax states who are able to relocate are checking it out, say local brokers. Morris, 58, said he may even bring his packaging company’s headquarters with him. Hedge fund managers, retirees and other wealthy folks from high-tax states are also looking at Florida.
Real estate brokers in the state are targeting buyers from the Northeast and other parts of the country with higher property and state taxes as Latin American buyers have pulled back amid political and economic unrest at home and a plunge in their currencies against the dollar. Last year’s federal tax bill, among other changes, limits deductions for state and local tax. The savings would mainly accrue to those making more than $1 million per year.
“New Yorkers are the new foreign buyers in Florida,” said Jonathan Miller, president of Miller Samuel. “For people who were looking for a reason to make domicile in Florida, the new tax laws made that decision easier.”
The data suggest Broward and Palm Beach counties -- typical destinations for
Northeasterners -- are outperforming majority Spanish-speaking Miami-Dade. But David Martin, developer Terra’s founder and chief executive, said to beware of distortions from a handful of high-end condominium development closings.
“New projects in Broward are going to skew your statistics more than they will
in Miami," he said. “All three counties are going to be benefiting from this tax migration."
Jorge Perez, the billionaire Related Group chief executive, said he sold 83 of the high-end condos at his Auberge Beach Residences & Spa in Fort Lauderdale last year. He added that foreign buyers are still coming to Florida and Broward County might finally be shedding its reputation as purely appealing to Americans.
“That spurt from international buyers has helped Fort Lauderdale a lot, because before it was purely a local and national market," he said.
Michelle Noga, an agent at William Raveis South Florida who is working with Morris from Bloomington, said customers have been paying close attention to Florida residency requirements.
“I just finished a showing with some people from Boston," she said of the retirees. "They want to live there for six months and one day.”
The tax changes have been good for the Palm Beach Hedge Fund Association, which has seen its membership swell to 1,700, increasing 10 to 15 percent over the past year, according to founder Dave Goodboy.
“I get phone calls on a weekly basis with people wanting to relocate here, both firms and individuals," Goodboy said. “About 80 percent of our members are in the area. The rest are interested in coming here.”
Morris and his wife, Lori, began searching in Palm Beach about nine months ago. While most of his more than 400 employees work in manufacturing plants, he has been talking to the 20 employees in the company headquarters about a possible move, he said.
“We’re looking for the right estate -- I want my own piece of beach, basically,” Morris said. “Right now, we pay a lot of state income tax.”
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