Estate Tax and Gifting Strategies for Florida Residents With Long Island Property

Florida residents pay no state estate tax and no state inheritance tax, so the only death tax most Floridians face is the federal estate tax, which in 2026 does not apply until an estate exceeds the $15 million per-person lifetime exemption. But that clean answer breaks down the moment a Florida resident owns real estate in another state. If you keep a house on Long Island, a co-op in Manhattan, or a rental in the Hamptons, New York can still reach that property at death, and New York’s rules are far less forgiving than Florida’s.

This is the planning blind spot we see most often among dual-state clients. People relocate to Florida, breathe a sigh of relief about taxes, and assume their entire estate is shielded. The Sunshine State does shield a great deal. The out-of-state real estate is where the exposure hides, and it is exactly where smart gifting and structuring earn their keep.

Why Florida Is a Tax Haven for Estates (and What That Doesn’t Cover)

Florida abolished its state estate tax in 2004 when the federal credit it was tied to phased out, and the state has never enacted an inheritance tax. The Florida Constitution actually bars the legislature from imposing one without a voter-approved amendment. For a true Florida domiciliary, that means the estate tax conversation begins and ends with the federal government.

Federal estate tax applies only to the value of an estate above the lifetime exemption. For 2026, the One Big Beautiful Bill Act set that exemption at $15 million per individual, or effectively $30 million for a married couple who plan correctly. Estates below those thresholds owe no federal estate tax at all. The annual gift tax exclusion for 2026 is $19,000 per recipient.

Here is the crucial limit on Florida’s protection: state estate tax follows the property, not just the person. Florida’s “no estate tax” status protects your Florida home, your bank accounts, and your investment portfolio. It does nothing for real estate physically located in a state that does impose an estate tax, and New York is one of the most aggressive.

How New York Reaches Florida Residents Who Own Long Island Real Estate

New York imposes estate tax on nonresidents, but only on real property and tangible personal property physically situated within the state. A Florida resident who dies owning a Long Island house is treated, for that asset, as having a taxable New York estate. The tax is prorated, so New York taxes the share of the estate represented by the in-state real property rather than your whole net worth.

The trap is in how New York measures whether you owe anything at all. Two features of New York law catch Florida residents off guard:

• The exemption is modest. The 2026 New York basic exclusion amount is $7,350,000, less than half the federal figure. An estate that is comfortably exempt federally can still be exposed in New York.
• The estate tax “cliff.” If a New York taxable estate exceeds 105% of the exemption, the exemption vanishes entirely and the estate is taxed from the first dollar. In 2026 that cliff sits at $7,717,500. Cross it by a little and the tax does not phase in gently, it lands on the whole estate.
• The cliff is measured against your worldwide estate. Even though New York only taxes the in-state real property, it looks at your entire worldwide estate to decide whether you have crossed the cliff. Your Florida assets count toward the threshold even though they are not themselves taxed.

So a Florida widow with a $9 million net worth and a $1.2 million house in Nassau County may assume she is fine because she is far below the federal exemption. She is not fine in New York. Her worldwide estate pushes her past the cliff, the exemption disappears, and New York taxes the prorated value of the Long Island home at rates that climb to 16%. This is the scenario that brings many of our dual-state clients to the table.

Confirm Your Florida Domicile First

Before any advanced planning, make sure your Florida domicile is airtight. Florida law (Fla. Stat. 222.17) lets you file a sworn declaration of domicile, but the declaration is only one piece of evidence. Domicile turns on intent shown through overt acts: where you vote, register vehicles, hold your driver’s license, file federal returns, and spend your days. A former high-tax state, New York included, will happily continue to claim you as a resident, and a resident’s worldwide estate is fully taxable, not just the in-state real property. Establishing and documenting Florida domicile is the foundation everything else rests on.

Gifting Strategies That Work for Florida Residents

Gifting is the most accessible lever, and it does double duty: it reduces the federal taxable estate and, for a Florida resident, it can move New York real estate off your balance sheet so it never enters the New York calculation at death.

1. Use the Annual Exclusion Consistently

The $19,000-per-recipient annual exclusion ($38,000 for a married couple electing to split gifts) is unglamorous but powerful over time. Gifts within the exclusion use none of your lifetime exemption and require no gift tax return. A couple with three children and three grandchildren can move $228,000 a year out of their estate without touching the lifetime exemption. Across a decade, that is real erosion of a taxable estate.

2. Make Lifetime Gifts of Out-of-State Real Estate

Because New York taxes the in-state real property you own at death, transferring that property out of your name during life can remove it from the New York estate entirely. Gifting a fractional interest in a Long Island property each year, often through an entity such as an LLC, lets you shift value gradually while applying valuation discounts for lack of control and marketability. This is technical work; the deed, the entity, and the gift tax returns all have to line up, and a botched transfer can create capital gains problems for your heirs. Done correctly, it is one of the cleanest ways to take a New York house out of harm’s way.

3. Plan the New York Property With Trusts and Retained Interests

Trust-based techniques can hold or transfer out-of-state real estate while controlling who benefits and when. One structure worth understanding is the retained life estate, which lets an owner transfer a remainder interest in real property while keeping the right to live in or use it for life. Morgan Legal’s New York team explains the mechanics and the New York-specific risks in their overview of New York home transfers and retained life estates, and a properly drafted plan can be coordinated with your Florida estate plan rather than fighting it.

4. Use Spousal Planning and Portability

Married couples can combine the marital deduction with portability of the federal exemption so that the surviving spouse can use both spouses’ unused exemption. New York, notably, does not offer portability, which makes credit shelter or bypass trusts more relevant for couples whose estates approach the New York cliff. The right structure depends on the size of the estate and how much New York-situated property is involved.

5. Coordinate Gifts With Your Core Documents

Gifting only works when it fits the larger plan. Your will, revocable trust, and beneficiary designations all have to reflect what you have already moved out by gift, or you create contradictions that surface in probate. If you still hold New York real estate at death, your estate may face ancillary probate there in addition to administration in Florida. A current, properly executed will is the backbone; Morgan Legal walks through the requirements for a valid last will and testament in New York, which matters for any Florida resident whose property could land in a New York court.

A Simple Order of Operations

1. Document Florida domicile. File the declaration, change your registrations and voting, and break residency ties with your former state.
2. Inventory your out-of-state property. Identify every parcel in New York or any other estate-tax state and value it honestly.
3. Run the cliff math. Compare your worldwide estate against the New York cliff, not just the federal exemption.
4. Decide what to gift, hold, or restructure. Use annual exclusions, lifetime gifts of real estate, and trusts where appropriate.
5. Align your documents. Update your will and trust so the plan is internally consistent and avoids surprise ancillary probate.

Florida residents with New York roots get the best of both systems when the plan is built deliberately: Florida’s shelter for the bulk of the estate, paired with targeted moves for the property that crosses state lines. If your situation spans both states, our team coordinates with attorneys licensed where your property sits, including Florida estate planning counsel and New York counsel, so nothing falls through the cracks. You can review our approach to wills and trusts or learn how out-of-state assets are handled in Florida probate, and reach out through our contact page when you are ready to map your own plan.

This article is general information, not legal advice. Estate and gift tax rules change and apply differently to every estate. Consult a licensed attorney before acting.

Frequently Asked Questions

Does Florida have an estate tax or inheritance tax in 2026?

No. Florida abolished its state estate tax in 2004 and has never had an inheritance tax. For a true Florida resident, the only potential death tax is the federal estate tax, which in 2026 applies only to estates above the $15 million per-person lifetime exemption. The exception is real estate located in another state that does impose its own estate tax.

If I live in Florida but own a house on Long Island, can New York still tax my estate?

Yes. New York imposes estate tax on nonresidents for real property physically located in the state, including Long Island. New York measures whether you exceed its 105% exemption cliff using your entire worldwide estate, even though it only taxes the in-state property. With the 2026 New York exemption at $7,350,000 and a cliff at $7,717,500, many Florida residents are exposed without realizing it.

How much can I gift each year without owing gift tax?

In 2026 you can give up to $19,000 per recipient under the annual exclusion without using any lifetime exemption or filing a gift tax return. A married couple electing to split gifts can give $38,000 per recipient. Consistent annual gifting steadily reduces your taxable estate over time.

Can gifting away my out-of-state property reduce my New York estate tax exposure?

Often, yes. Because New York taxes the in-state real property you own at death, transferring that property out of your name during life, frequently through an LLC and incremental gifts, can remove it from the New York estate entirely. The transfer must be structured carefully to avoid gift tax and capital gains pitfalls, so work with experienced counsel.

What is the New York estate tax cliff and why does it matter to Florida residents?

If a New York taxable estate exceeds 105% of the exemption (about $7,717,500 in 2026), the exemption disappears and the estate is taxed from the first dollar rather than only on the excess. New York applies this test against your worldwide estate, so a Florida resident’s Florida assets can push the New York-situated property over the cliff and trigger tax that proper planning could have avoided.