Cost Segregation in Florida

Zero state income tax, the nation's largest domestic migration wave, and generous homestead protections make Florida the ultimate destination for real estate investors — but sky-high insurance costs and hurricane risk demand smart planning.

Population
23.0M
Median Home
$380K
Property Tax
0.86%
22nd lowest in U.S.
State Income Tax
0%
None
Bonus Depreciation
Partial
State Conformity
Avg. Insurance
$4,200
83% above average — highest in the nation
Tax Strategy

Cost Segregation & Tax Rules in Florida

Understanding how federal and Florida state tax rules interact is critical to maximizing your cost segregation benefits.

Cost Seg Overview
State vs. Federal Rules
Tax Landscape
Median Home Price
$380K
Building Value
75%
of purchase price
Cost Seg Range
25-40%
of building reclassified
Median Home Age
28 yrs
Built ~1996
What Gets Reclassified

A cost segregation study identifies building components that can be depreciated over 5, 7, or 15 years instead of the standard 27.5 or 39 years. In Florida, typical reclassification rates are 25-40% of building value.

Common Property Types
Single-Family DetachedCondos/TownhomesPool HomesSmall Multi-Family (2-4 units)
Florida properties with pools, lanais, and hurricane-rated windows/doors often yield higher-than-average cost seg reclassification percentages. These components qualify for accelerated depreciation and are common in Florida construction.
Overline Study Cost & ROI
Overline Study Cost
$499 - $2,000
Avg. ROI
10-40x

The math: A $380K property with 75% building value and 30% reclassification yields ~$32K in Year 1 federal tax savings at the 37% bracket — significantly more ROI than traditional studies costing $5,000-$10,000+.

Housing Stock Advantage

With a median build year of 1996, Florida's housing stock has identifiable components (HVAC, electrical, plumbing, landscaping) that are strong candidates for accelerated depreciation.

N/A — No State Income Tax
Florida Bonus Depreciation Conformity

Because Florida has no state income tax for individuals, there is no state-level depreciation deduction or conformity issue. Federal bonus depreciation under Section 168(k) applies in full. There is no state return to file for individual investors.

What This Means for Your Investment: Florida investors benefit from clean, simple cost segregation planning. Your entire tax benefit is federal — no state addback, no conformity complications, and no state depreciation recapture. Combined with low property taxes, Florida maximizes your after-tax returns.

Federal vs. FL Depreciation Timeline
PeriodFederal TreatmentFL State Treatment
Year 1100% bonus depreciationN/A — No state income tax
Years 2+Standard MACRS schedulesN/A — No state income tax
Section 179 Expensing
State ConformityLimited

Federal Section 179 limits apply — Florida has no state income tax. FL investors benefit from keeping 100% of their federal tax savings with no state clawback, making the Sunshine State one of the most tax-efficient environments for real estate investing.

Key Takeaway

A $380K property with a $285,000 depreciable basis and 30% cost seg reclassification yields ~$31,635 in federal tax savings in Year 1. Because Florida has no state income tax, your total Year 1 savings = $31,635 with zero state tax friction.

Bottom Line

Florida is one of the simplest states for cost segregation. No state income tax = no conformity issues. Your entire savings are federal, immediate, and unreduced. The only planning consideration is Florida's high insurance costs, which should be factored into your cash flow analysis.

Eff. Property Tax
0.86%
22nd lowest in U.S.
Transfer Tax
$0.70 per $100 of sale price (documentary stamps)
State Income Tax
0%
None
Property Tax Details

Florida's Save Our Homes amendment caps assessed value increases at 3% per year for homesteaded properties. Investment properties do not receive this cap. Effective rates vary from 0.70% (rural) to 1.10% (South Florida).

Assessment Methodology
MethodJust (market) value with Save Our Homes 3% cap for homestead
Reassessment CycleAnnually
Assessment BodyCounty Property Appraiser
Appeal WindowWithin 25 days of TRIM notice (typically August-September)
Appeal Success Likelihood
Very High
LowModerateGoodVery High

Florida's Value Adjustment Board (VAB) process is investor-friendly — no attorney required, and roughly 40-50% of appeals result in reductions. Non-homestead investment properties lack the 3% SOH cap, making them more susceptible to aggressive valuations and better candidates for appeal.

Work with Overline — Our team helps Florida investors identify over-assessed properties and file tax appeals. A successful appeal can save thousands annually and compounds your cost seg savings.

Illustrative Example

Cost Seg Example for Florida

This example assumes a purchase eligible for 100% bonus depreciation. All factors below are based on averages from our historical cost segregation studies for FL properties. To see your exact savings, run a property-specific cost seg analysis below.

Typical Florida Property Details
$
50%95%
5%35%
2%25%
Total Reclassified30% of building
10%37%
Estimated Year 1 Tax Savings
Building Value$285,000
$380,000 x 75%
Normal Annual Depreciation$10,364
$285,000 ÷ 27.5 yr (residential)
5-Year Reclassified$51,300
15-Year Reclassified$34,200
Total Accelerated$85,500
30% of $285,000 building value
Federal Tax Savings (Year 1)$31,635
$85,500 x 37% bracket
Total Year 1 Tax Savings$31,635
8.3x normal annual deduction captured in Year 1

FL State Tax: Florida investors benefit from clean, simple cost segregation planning. Your entire tax benefit is federal — no state addback, no conformity complications, and no state depreciation recapture. Combined with low property taxes, Florida maximizes your after-tax returns.

Depreciable Basis

Land vs. Building Value in Florida

The land-to-building ratio directly impacts your cost segregation benefit — only the building portion is depreciable. Here is how Florida breaks down by region.

Statewide Average
Building (Depreciable)75%
Land (Non-Depreciable)25%
75%
Depreciable Basis
Breakdown by Region
Tampa Bay Metro
78% Building

Balanced metro with moderate land costs. Suburban areas like Wesley Chapel and Riverview offer strong building ratios.

Jacksonville Metro
80% Building

Affordable land and newer suburban construction create excellent cost seg fundamentals.

Orlando Metro
76% Building

Tourism-driven land values near Disney/Universal. Suburban areas (Kissimmee, Clermont) have better ratios.

Miami-Dade / Broward
65% Building

Very high land premiums in South Florida significantly reduce depreciable basis. Condos may have better ratios than SFH.

Coastal / Beachfront
60% Building

Waterfront premiums are extreme. Cost seg is less efficient on beach properties due to high land values.

Investor Takeaway

Jacksonville and Tampa offer the best cost seg fundamentals with 78-80% building values. Orlando suburbs are solid at 76%. Avoid Miami and beachfront properties if cost seg is a primary strategy — the 60-65% building ratios significantly reduce your depreciable basis.

Insurance & Risk

Insurance Landscape in Florida

Insurance costs directly impact your cash flow. Understanding Florida's risk profile helps you budget accurately and avoid coverage gaps.

Avg. Annual Premium
$4,200
83% above average — highest in the nation
National Average
$2,300
for comparison
Premium Trend
Rising 15-25% annually. Florida is in a full insurance crisis with carriers leaving the state.
Primary Risk Drivers
1
Hurricanes
Florida averages a hurricane landfall every 2-3 years. Hurricane Ian (2022) caused $112B in damages. Hurricane season runs June-November.
2
Litigation & Fraud
Florida has the highest rate of insurance litigation in the U.S. Assignment of Benefits (AOB) abuse and roof claim fraud have driven multiple carriers out of the state.
3
Flooding
Florida is the #1 flood risk state. Flood insurance is separate from homeowner's and adds $1,000-3,000/year in many areas. Sea level rise is increasing flood zone designations.
Coverage Recommendations
Shop aggressively — Citizens (state insurer of last resort) vs. private market. Get 3+ quotes.
Flood insurance is essential statewide (NFIP or private). Do not skip this.
Named storm / hurricane deductible (typically 2-5% of dwelling coverage) — understand this before purchasing
Wind mitigation inspection — can reduce premiums 10-40% with proper shutters, roof ties, etc.
Umbrella liability policy ($1M+) is critical for rental properties in a high-litigation state
Cost Seg + Insurance Connection

Florida's insurance crisis makes accurate building valuation more important than anywhere else. A cost seg study provides component-level documentation that supports precise replacement cost estimates — critical when carriers are scrutinizing every claim. This documentation can also help you avoid over-insurance, potentially saving thousands annually.

Market Fundamentals

Economy & Housing Demand in Florida

Strong economic engines create stable rental demand. Here is what drives Florida's economy and housing market.

State GDP
$1.6T
Growing 3.2%/year
Unemployment
3.2%
Below national average
Median Income
$70,000
+22.1% over 5 years
Pop. Growth (1Y)
+1.9%
+365,000/year net migration
Major Industries
Tourism & Hospitality15%
Disney, Universal, cruise lines, and 137M+ annual visitors make tourism Florida's signature industry. $102B annual economic impact.
Healthcare13%
Mayo Clinic (Jacksonville), AdventHealth, HCA Florida, and Cleveland Clinic Florida serve the state's aging and growing population.
Finance & Insurance11%
South Florida is a major financial hub. Raymond James (Tampa), Fidelity, and numerous hedge funds and private equity firms.
Defense & Aerospace10%
MacDill AFB (Tampa), NAS Jacksonville, Patrick SFB (Cape Canaveral), Eglin AFB. SpaceX and Blue Origin launch operations.
Technology9%
Tampa and Orlando emerging as tech hubs. Chewy, ReliaQuest (Tampa), Electronic Arts (Orlando), and growing remote worker in-migration.
Key Economic Engines
Walt Disney World: 75,000+ employees, $75B annual economic impact on Central Florida
MacDill AFB (Tampa): U.S. Central Command, U.S. Special Operations Command — $15B+ annual impact
Port of Miami + Port Everglades: Largest cruise ports in the world, major cargo operations
Space Coast: SpaceX, Blue Origin, ULA, and NASA — 25,000+ aerospace jobs in Brevard County
Housing Demand Signals
5-Year Pop. Growth
+10.8%
Housing Permits YoY
+4.5%
Median Days on Market
40 days
Months of Inventory
3.2
Migration: Northeast and Midwest flight (no income tax, warm climate), remote work flexibility, and retiree migration. Florida adds more residents than any state except Texas.
Construction: Concrete block (CBS) construction, Stucco exterior, Slab-on-grade foundation, Hip roof (hurricane-resistant design)
Landlord & STR Rules
Landlord Friendliness
Friendly
Eviction Timeline
30-45 days
Rent Control
Prohibited statewide (Florida Statute § 166.043)
STR Regulation
State preemption

Florida passed SB 280 (2024) which preempts local governments from banning STRs entirely. Local jurisdictions can regulate but cannot prohibit. This makes Florida one of the most STR-friendly states. STR operators must register with the state (DBPR) and collect sales/tourist development tax.

Local Markets

Top Cities for Investors in Florida

Explore city-level cost segregation data, sample deals, and investment fundamentals for each major market in Florida.

Tampa, FL
#3 FL Metro Growth
Median Home
$375K
Rent (3BR)
$2,100
Property Tax
0.89%
Avg. Insurance
$3,800/yr
Est. Year 1 Tax Savings$32K+
View Tampa Details
Jacksonville, FL
#1 FL Affordability
Median Home
$310K
Rent (3BR)
$1,800
Property Tax
0.83%
Avg. Insurance
$3,200/yr
Est. Year 1 Tax Savings$28K+
View Jacksonville Details
Orlando, FL
Tourism Capital
Median Home
$385K
Rent (3BR)
$2,100
Property Tax
0.92%
Avg. Insurance
$3,600/yr
Est. Year 1 Tax Savings$32K+
View Orlando Details
Miami, FL
Global Gateway
Median Home
$550K
Rent (3BR)
$2,800
Property Tax
0.97%
Avg. Insurance
$5,500/yr
Est. Year 1 Tax Savings$43K+
View Miami Details
Local Partners

Investor-Friendly Partners in Florida

We are building a curated directory of top investor-friendly brokers, property management companies, and service providers in Florida.

Investor-Friendly Brokers

Top real estate agents who specialize in investment properties and understand cost segregation, 1031 exchanges, and cash-flow analysis.

Coming Soon
Property Management

Vetted property managers who handle tenant screening, maintenance, and rent collection for both long-term and short-term rentals.

Coming Soon
Insurance Agents

Independent insurance agents who specialize in rental property coverage and can leverage cost seg data for accurate replacement cost estimates.

Coming Soon

Are you a broker, property manager, or insurance agent serving investors in Florida?

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Frequently Asked Questions

Cost Segregation FAQ — Florida

Does Florida conform to federal bonus depreciation?

−

Because Florida has no state income tax for individuals, there is no state-level depreciation deduction or conformity issue. Federal bonus depreciation under Section 168(k) applies in full. There is no state return to file for individual investors.

What is the property tax rate in Florida?

+

The effective property tax rate in Florida is 0.86%, ranked 22nd lowest in U.S. in the U.S. Florida's Save Our Homes amendment caps assessed value increases at 3% per year for homesteaded properties. Investment properties do not receive this cap. Effective rates vary from 0.70% (rural) to 1.10% (South Florida).

How much can I save with cost segregation in Florida?

+

A $380K property with a $285,000 depreciable basis and 30% cost seg reclassification yields ~$31,635 in federal tax savings in Year 1. Because Florida has no state income tax, your total Year 1 savings = $31,635 with zero state tax friction.

What are the typical cost segregation reclassification rates in Florida?

+

In Florida, typical cost segregation studies reclassify 25-40% of building value into accelerated depreciation categories (5-year, 7-year, and 15-year property). Overline studies cost $499-$2,000 with 10-40x ROI.

What is the average insurance cost for rental properties in Florida?

+

The average annual homeowner insurance premium in Florida is $4,200, which is 83% above average — highest in the nation the national average of $2,300. Key risk drivers include Hurricanes and Litigation & Fraud.

What is the state income tax rate in Florida?

+

Florida has a state income tax rate of 0% (None). Florida has no state income tax (protected by the state constitution since 1924). This means 100% of your cost segregation benefits come from federal savings with zero state-level friction. Florida's corporate income tax (5.5%) applies only to C-corporations, not individual investors.

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