Working with retired people, a common question we get is, “Should we move from New Jersey to Florida.” Given how expensive it can get in New Jersey, people often entertain the idea of settling down elsewhere for their golden years. But it’s not a simple decision! Here’s what you should be considering if you are contemplating this question of New Jersey vs. Florida or other states for your retirement.
We are financial advisors in Morristown, NJ, providing financial advice for New Jersey residents as well as folks across the country. Before we get started, you may want to check out other New Jersey finance blogs we’ve written:
A checklist for moving to Morristown, NJ from NYC
What is the average income in New Jersey?
What is the New Jersey 529 Plan and should I use it to send my kids to college?
Should you buy a New Jersey vacation home?
40 questions to ask a financial advisor in New Jersey
The typical New Jersey to Florida exchange: not ideal for everyone!
We commonly see soon-to-be-retirees, or those who have retired, making this move:
- They decide that living in New Jersey is too expensive, and sell their house.
- They buy a house in Florida (or another state, but many times it’s Florida) for the exact same amount, essentially to lower the amount of property tax.
Sounds like a rosy scenario, right?
Hmmm.
Well, not all the time.
Here’s where the situation can get complicated. In Florida, for example, the cost of homeowners insurance is much higher than in New Jersey. This is because hurricane risk drives up insurance cost for homeowners in that state.
The cost of living can be expensive in other ways, too. We know of one individual who had to move out of Florida to avoid replacing the roof on her home. The cost of a roof in Florida (had to be a “Spanish tile” roof) would be double what a single tile roof in New Jersey would cost.
All of this is to say that moving from New Jersey to Florida isn’t ideal for everyone. Although the appeal of warmer weather and lower overall cost of living may be enticing, you have to look at the specific factors and what they mean for you.
Financial Factors to consider
If you are considering the move from New Jersey to Florida, think about these factors before you go forward with it.
Cost of real estate
The cost of living in New Jersey is higher than in Florida, in general, and more expensive real estate plays a big part in that. However, it’s useful to consider the dynamics at play. The rate of increase in property value has been higher in Florida than in New Jersey and New York in recent years, because of the exodus from the Northeast into the state due to the pandemic.
Before we throw the Garden State under the bus for being pricier in terms of living costs, let’s consider this. Although it does cost more to live in New Jersey, on balance, the benefits of living there are significant as well. Prices are high in New Jersey because incomes are high, and with that comes an overall increase in the amenities that many retirees benefit from, such as access to high quality healthcare, public transportation, and other civic amenities.
Property tax and permanency of residence
Property tax in Florida is lower than New Jersey, but you have to consider the duration of time you will actually live there full time.
Consider the Florida Homestead Act, which says that the value of a home cannot be assessed to have risen by more than the lower of either 3% or the rise in the Consumer Price Index. Also, permanent Florida residents get a reduction in assessed property value of $50,000. However, to benefit from this you have to actually live in the state for most of the year. If you rented out the property for more than 30 days in that calendar year, this Act does not apply.
Permanency of residence is a huge factor in other states than Florida. Look at South Carolina, a state which charges you a much higher property tax rate if you are not a full-time resident.
On the other hand, New Jersey does, however, offer property tax rebates for New Jersey seniors earning less than $150,000 and above age 65 under the Homestead Benefit program. Property taxes do tend to vary widely depending on where you live within the state – be sure to check out our blog on New Jersey property taxes to learn more.
NJ vs. Florida Taxes
If you are thinking of moving from New Jersey to Florida, consider the tax differences.
- In Florida there is no income tax (compared to New Jersey’s income tax rates which can get as high as 10.75%.
- However, the sales tax is assessed on a variable basis, as some municipalities levy a higher tax than others. New Jersey charges a flat sales tax rate of 6.625%
- Neither New Jersey nor Florida charges an inheritance or estate tax as long as certain conditions are met. Our blog on retiring in New Jersey has more information about the specifics.
- Florida doesn’t tax investment income, while New Jersey only exempts income on distributions from certain types of accounts for folks beneath a certain income limit.
Did we shed any light on your decision to move from New Jersey to Florida?
We hope you’ve enjoyed our blog on what to consider if you are thinking of moving from New Jersey to Florida.
We are financial advisors in Morristown, NJ serving the local community and beyond. If you have questions about retiring in New Jersey, moving there, affording to live there, or (like us) are just plain old Bruce Springsteen fans, reach out and send us a message.
Sources
Alper, Jon. (2023, April 14th). Alper Law. Florida Homestead Law and Creditor Protection. https://www.alperlaw.com/florida-asset-protection/florida-homestead-law/
Barchenger, Stacey. (2021, June 21st). NorthJersey.com. NJ property tax aid: Lawmakers, Gov. Murphy agree to expand Homestead credit in budget. https://www.northjersey.com/story/news/2021/06/21/nj-property-tax-budget-homestead-credit/7762186002/
NJ Treasury. Division of Taxation. Sales and Use Tax. https://www.state.nj.us/treasury/taxation/businesses/salestax/index.shtml