DC residency, taxes, etc, after buying a second home in a no-tax state

[Anonymous]

Anyone have any experience with attempting to extricate oneself from DC residency while still owning a home in the city? I understand it's more complicated than just "don't spend six months in DC".

The state I've bought in has really lenient residency rules, so it's all about trying to remove myself from DC's rolls while still spending some of the year in a DC home I own.

If I were to rent out my DC home full time, would DC still glare at me for owning a house here?

I know,. I need to talk to a lawyer, but was just wondering if anyone has any personal experience.

[Anonymous]

For starters, your real estate taxes would double as a non-resident home-owner.

[Anonymous]

Lots of people do this.

Establish your residence in another state (buy/rent a house, change driver’s license, car registration, etc).

Don’t spend more than 6 months per year total in DC. Document this. (Note - you don’t have to be in the state of residence, you just can’t be in DC.)

DC is easier than most, because it has tax reciprocity with all other states. You can work in DC and pay all of your income tax to the state of your residence. Many states tax all income earned in the state.

[Anonymous]

Anonymous wrote:For starters, your real estate taxes would double as a non-resident home-owner.

No they wouldn’t

[Anonymous]

We bought a home in a low tax state during covid and spend almost all of our time here. Still, I would never give up my DC residency because the benefits of being a resident are much more generous than just about anywhere else. You never know what kind of help you might need in the future.

I’m also very glad that I’m not so cheap and tight that I have to make residency decisions on things like state taxes. It’s pathetic.

[Anonymous]

Anonymous wrote:We bought a home in a low tax state during covid and spend almost all of our time here. Still, I would never give up my DC residency because the benefits of being a resident are much more generous than just about anywhere else. You never know what kind of help you might need in the future.

I’m also very glad that I’m not so cheap and tight that I have to make residency decisions on things like state taxes. It’s pathetic.

Tax law is just that - a set of laws that you can read and follow. If you're legitimately a resident of a lower tax State, then file in that State. You aren't violating the letter or the spirit of tax law. Pathetic is being dumb money who pays more than the laws require them to. You'd be better off just donating the excess to charity if you wanted.

[Anonymous]

Anonymous wrote:We bought a home in a low tax state during covid and spend almost all of our time here. Still, I would never give up my DC residency because the benefits of being a resident are much more generous than just about anywhere else. You never know what kind of help you might need in the future.

I’m also very glad that I’m not so cheap and tight that I have to make residency decisions on things like state taxes. It’s pathetic.

If you ever needed those benefits, you better believe they will question whether you are actually a resident if you are living in another state.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We bought a home in a low tax state during covid and spend almost all of our time here. Still, I would never give up my DC residency because the benefits of being a resident are much more generous than just about anywhere else. You never know what kind of help you might need in the future.

I’m also very glad that I’m not so cheap and tight that I have to make residency decisions on things like state taxes. It’s pathetic.

If you ever needed those benefits, you better believe they will question whether you are actually a resident if you are living in another state.

DC won’t question anything if you file and pay taxes to DC. Seriously, a DC tax filing basically stops all inquiries. If you pay, you can play.

[Anonymous]

Anonymous wrote:We bought a home in a low tax state during covid and spend almost all of our time here. Still, I would never give up my DC residency because the benefits of being a resident are much more generous than just about anywhere else. You never know what kind of help you might need in the future.

I’m also very glad that I’m not so cheap and tight that I have to make residency decisions on things like state taxes. It’s pathetic.

You do realize that the state you’re living in could go after you for unpaid tax? If you live there more than six months a year, you owe tax there. They don’t care that DC’s taxes are higher. Your residence is where you live the majority of the year. Period.

[Anonymous]

Anonymous wrote:We bought a home in a low tax state during covid and spend almost all of our time here. Still, I would never give up my DC residency because the benefits of being a resident are much more generous than just about anywhere else. You never know what kind of help you might need in the future.

I’m also very glad that I’m not so cheap and tight that I have to make residency decisions on things like state taxes. It’s pathetic.

Can you elaborate?

[Anonymous]

I have rental properties in DC which are the main source of my income. Honestly after all the write offs my income state tax is under $5K/year. DC gives benefits like FMLA for example where you can get the city pay 6 weeks of ANNUAL leave to take care of a family member. I just took one and will do so next year. Also, DC has free preschools

[Anonymous]

Anonymous wrote:I have rental properties in DC which are the main source of my income. Honestly after all the write offs my income state tax is under $5K/year. DC gives benefits like FMLA for example where you can get the city pay 6 weeks of ANNUAL leave to take care of a family member. I just took one and will do so next year. Also, DC has free preschools

Also the Obamacare healthcare options are better than in most states.

[Anonymous]

Anonymous wrote:Anyone have any experience with attempting to extricate oneself from DC residency while still owning a home in the city? I understand it's more complicated than just "don't spend six months in DC".

The state I've bought in has really lenient residency rules, so it's all about trying to remove myself from DC's rolls while still spending some of the year in a DC home I own.

If I were to rent out my DC home full time, would DC still glare at me for owning a house here?

I know,. I need to talk to a lawyer, but was just wondering if anyone has any personal experience.

The biggest issues (imo) are to refinance your DC home as a second home (if you have a mortgage) and remove the homestead exemption. Spend less that six months a year in DC. Other than that, do the obvious-- change your paperwork, truly move into the new residence (take things with you that matter- family photos, sentimental items) and treat the DC property as a second house, not a primary family home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have rental properties in DC which are the main source of my income. Honestly after all the write offs my income state tax is under $5K/year. DC gives benefits like FMLA for example where you can get the city pay 6 weeks of ANNUAL leave to take care of a family member. I just took one and will do so next year. Also, DC has free preschools

Also the Obamacare healthcare options are better than in most states.

This is true of all blue cities/states — they are great places to live if you aren’t wealthy and qualify for government services. Meanwhile, the wealthy are leaving in droves. Enjoy it while it lasts — it’s unsustainable.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We bought a home in a low tax state during covid and spend almost all of our time here. Still, I would never give up my DC residency because the benefits of being a resident are much more generous than just about anywhere else. You never know what kind of help you might need in the future.

I’m also very glad that I’m not so cheap and tight that I have to make residency decisions on things like state taxes. It’s pathetic.

Tax law is just that - a set of laws that you can read and follow. If you're legitimately a resident of a lower tax State, then file in that State. You aren't violating the letter or the spirit of tax law. Pathetic is being dumb money who pays more than the laws require them to. You'd be better off just donating the excess to charity if you wanted.

Like I said, I don't want to give up my DC residency. So, while I no longer spend anywhere near six months year in DC, I keep my DC driver's license, voting registration, etc. I also claim the homestead exemption on my DC home and pay my state taxes there. All I pay here (in the other state) is my real property tax.