Rich New Yorkers are flocking to Florida. But soaring prices might offset the tax perks

The tax overhaul is fueling a luxury home boom in Florida.

Prices for luxury properties in the state climbed 16 percent in the second quarter versus a year earlier, according to Bloomberg. And values for the top 5 percent of properties rose at the fastest pace in five years, even as prices in the rest of the Florida market increased only 7 percent.

“The trigger is tax reform,” Jay Phillip Parker, CEO of Douglas Elliman Real Estate’s operations in Florida, told Bloomberg. “They’re telling me flat out: ‘I made the move because of taxes.’ The implications are hugely significant if you’re a high-income earner.”

Wealthy out-of-state buyers have been flocking to South Florida, with plans to establish residency to avoid shelling out money to the government as a result of last year’s tax reform. They’re often from states like New York, New Jersey, Connecticut, California and Illinois — places with state income taxes as high as 13.3 percent. Meanwhile, Florida has no state income tax.

In the first half of 2018, sales of million-dollar homes in southwestern Florida were the highest in at least a decade, rising 25 percent from a year earlier, the report said. But at this rate, the tax advantages will soon be baked into higher home prices.

Because the tax changes tend to favor wealthy Americans, some may be using the savings to buy second homes. And baby boomers, now in their mid-50s to early 70s, may be downsizing, according to the report. [Bloomberg] — Meenal Vamburkar