The first thing to say with regard to taxes is that they are very personal things. Although there are some broad guidelines I can give here about taxes to be aware of, the impact of those taxes on you as an individual will vary according to your exact circumstances.

How you operate your financial affairs between the UK and the USA, residency status, the path your money follows in and out of the country will all have a potential bearing on your tax liabilities – and any opportunities to minimize your taxes will be dependent upon exact circumstances, not broad generalizations!

Bottom line: get good professional advice from people who understand all the ins and outs of tax for UK owners of Florida property. Everyone in the USA is required to submit (file) an annual tax return, and over half of them use some kind of help in preparing that return – not always a qualified professional accountant.

Assuming you have not moved all your financial affairs within the borders of the USA, you would be well advised to get the help of someone familiar with international finance to help file your tax return.

I will include some indicative figures in this chapter purely to put my comments in context – you will of course be aware that things like rates and allowances can be changed by local and federal government at any time.

If you want to do some in-depth research of your own in advance, the up-to-date technical details can be found online at the websites of the Inland Revenue Service www.IRS.gov and the Florida Department of Revenue www.MyFlorida.com/dor.

RESIDENT OR NOT?
Depending on what residency status you have (if any), you may be taxed as a resident or a non-resident. If you're a permanent resident of the US or a US citizen, you must file a tax return that includes all your worldwide income. Non-residents are taxed only on income that is US-sourced – the most obvious regular candidates being rental income and any other income arising from your property ownership.

TAX ON INCOME
All rental income received in Florida is subject to US tax and is paid locally. The first piece of good news is that tax treaties between the USA and the UK mean you won’t have to pay tax twice on income earned in the USA.

The next piece of good news (you thought a chapter on taxes was going to be all bad news didn’t you?) is that Florida is one of the few states in the USA that don’t impose personal income tax – a luxury that the state affords mainly due to the substantial volumes of sales tax generated by the tourist industry. You do however still have to pay federal income tax.

Federal income tax is not very dissimilar to the UK at lower levels, but it is more generous as your income gets higher – with a large 20% band and a maximum rate of 35% that doesn’t kick in until considerably higher than the UK higher rate.

In practice, many property rental experts suggest that you should expect to pay little or no tax on rental income. This is because the taxable allowances for this activity are extremely generous and include your mortgage interest, maintenance and other fees and costs, plus an allowance for two annual “inspection” flights from the UK.

SALES TAX
Florida businesses must collect sales tax for many products and services – the complete list is at the Florida Department of Revenue website. You must register initially as a sales tax dealer and then pay the sales tax you collect to the state on a monthly basis – unless you are collecting relatively small amounts, in which case you may pay quarterly, twice yearly, or even annually.

Your management company will probably include the collection of this tax in their service.

Use Tax
“Use” Tax is a novel concept for Brits moving to Florida, and comes about because of the different local sales tax rates from state to state.

Although there are some complex rules concerning special cases, the general idea is that if you buy a product in one state (or another country) and bring it into Florida to use it, then you have to pay tax on it as if it were purchased within the state. If the state you purchased from has already applied some sales tax, you only pay use tax at a level that brings the total tax paid up the total amount you would have paid if purchased in Florida.

Again, it is likely that your liability for any use tax will be for products and services routed through your management company – and they will of course be much more familiar with the concept than you are!

If you are considering relocating to The USA then there are many more tax considerations you need to be advised on - we work with a number of Accountants specializing in UK and US tax matters.