Out-of-state individuals with parents who own a vacation home or a second property in Florida can rent it out, but you may first wish to consider how it may affect your estate plans. Renting an idle home to a tenant while your parents do not reside in it may qualify as taxable income for an estate or its beneficiaries. With proper planning, however, generating streams of additional income may help with providing for your parents’ necessities such as medical care or living expenses.
While Florida does not have a state income tax nor a “death” or estate tax, your home state may find a way to tax the income you receive from an out-of-state property that you benefit from. Changing your primary domicile from your home state to Florida may help in reducing a large tax liability.
As reported by Kiplinger magazine, you must prove the Sunshine State is your domicile to take advantage of its income tax structure when renting out your parents’ property. It requires that you physically reside in Florida for 183 days out of the year in order to establish the state as your domicile for tax reporting purposes. Some ways to prove your Florida residency are applying for a driver’s license, opening a bank account or registering to vote.
Starting a business may also prove that you intend to sow your seeds as a resident of Florida. Before making your parents’ property available on the rental market, however, you may need to take out an insurance policy and maintain the home in compliance with local housing laws.