Moving Residency for Tax Purposes - Anyone Done This?

[Anonymous]

Anonymous wrote:My friend moved to FL the year before he sold his company (it helped the kids had just gone off to college). He saved over $500k in VA income taxes by doing so, in the year he sold his company.

But then he had to live in Florida!

[Anonymous]

While you save income tax…the larger reason to do it are DC estate taxes. They kick in at a little more than $4MM.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Plenty of people do this. Keep track of credit card statements in case you have to prove that you were actually there for 6 months.

Because OP is planning to keep their place here, no doubt will be here quite a bit, will continue to rely on our services, but wants to avoid paying taxes. Then they'll complain about how things are here, without putting their money where their mouth is. Not to mention they're likely to cheat and be here more than six months a year.

When doing your math, OP, don't forget you lose the homestead exemption on your house, the opportunity for a 50 percent reduction in your property taxes through the senior citizen discount, the right to register your car here and get zoned parking, etc. etc. etc. Plus it's just a shitty thing to do to the city and it makes you a cheapo. If you have to change your residency to avoid city taxes you're not comfortable enough to retire.

Yes, we have a second home in a much more friendly tax state. No, we don't consider this.

Well, you’re a fool.

Maybe. But I'm sure as hell not gonna start counting my days to save taxes.

OP isn't saying "we're finally empty nesters and can move to where we want and away from DC." Nope. She's saying that as empty nester she thinks it's "doable" to be here less than six months. So yeah it's all about structuring your very whereabouts around state incomes taxes. Pretty sad.

Not really. Assuming you like it in DC and like the other location, I think it could be a lot of fun and very freeing!

Except that's not what OP is saying. What about "we think it's doable" do you not understand? And what's "freeing" about counting your days?

That’s exactly what OP is saying. She thinks it’s doable because the kids will be away. Assuming the location isn’t super far away it would be easy to go back and forth. No one says the 183 days have to be consecutive.

[Anonymous]

Anonymous wrote:While you save income tax…the larger reason to do it are DC estate taxes. They kick in at a little more than $4MM.

This is my sister and her DH. They have relocated to their country house in VA (no estate tax) where they have established residency while keeping their DC house.

Far less than 1 percent of DC tax revenue comes from estate taxes. Yet it drives high income individual out of DC into these kind of residency arrangements. Too bad—especially as they are willing to pay high income taxes but can’t stomach the high estate taxes. Once again DC cuts off its nose to spite its face in the name of equity.

[Anonymous]

Anonymous wrote:You have to actually move- change all of the "things" - voter registration, car, driver's license. Your DC home becomes your second home, no homestead exemption in DC, and so forth. Spend less than 183 days in DC (including half days). Yes, at that point you're a resident of another state with property in DC. Nothing shady about that.
These things are only questionable when you live in one state while claiming you live in another. I think residency audits are more common when people leave high tax states for low tax states without really leaving. NYC, for instance, is aggressive about residency.

+1 you really need to get into the details of your life, not just count days - dentist, doctors, church, …. You essentially have to prove you have left your prior life to start a new one in the new location.

[Anonymous]

Anonymous wrote:My retired relatives do this. They have a really nice Airstream trailer and spend at least 6 months of the year at an RV park in Florida.

You need to register your vehicles there, change your driver's license, and voting registration to help establish tax residency. One thing to watch for is that in low income tax states, the government finds other ways to raise revenue, like through property tax, personal property tax, or sales tax. For example Tennessee has no state income tax but sales tax is 7-9% depending on what city you're in. Texas has no state income tax but property tax is about 2% (around the DMV it's around 1%).

Whenever someone gives the sales tax makes up for it argument I know they are a low earner and haven’t paid high taxes.

Many of us are paying tens of thousands or even hundreds of thousands a year in state income taxes. No, an extra 3% in sales tax on consumer goods and restaurant meals will NOT make up for the $80k I paid last year to my state.

Now if you’re a low earner and don’t pay much in income tax then I can see that you might be concerned with sales tax.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Plenty of people do this. Keep track of credit card statements in case you have to prove that you were actually there for 6 months.

Because OP is planning to keep their place here, no doubt will be here quite a bit, will continue to rely on our services, but wants to avoid paying taxes. Then they'll complain about how things are here, without putting their money where their mouth is. Not to mention they're likely to cheat and be here more than six months a year.

When doing your math, OP, don't forget you lose the homestead exemption on your house, the opportunity for a 50 percent reduction in your property taxes through the senior citizen discount, the right to register your car here and get zoned parking, etc. etc. etc. Plus it's just a shitty thing to do to the city and it makes you a cheapo. If you have to change your residency to avoid city taxes you're not comfortable enough to retire.

Yes, we have a second home in a much more friendly tax state. No, we don't consider this.

Well, you’re a fool.

Maybe. But I'm sure as hell not gonna start counting my days to save taxes.

OP isn't saying "we're finally empty nesters and can move to where we want and away from DC." Nope. She's saying that as empty nester she thinks it's "doable" to be here less than six months. So yeah it's all about structuring your very whereabouts around state incomes taxes. Pretty sad.

Not really. Assuming you like it in DC and like the other location, I think it could be a lot of fun and very freeing!

Except that's not what OP is saying. What about "we think it's doable" do you not understand? And what's "freeing" about counting your days?

PP, you made the choice to, rather than just saying "I wouldn't do that for XYZ reasons," cast aspersions on OP, and then repeatedly double down on them in subsequent posts. I'm not sure why that is. Can you explain?

[Anonymous]

We have done it and maintained our northern residence to be near our children and grandchildren. You need to get a drivers license, voter registration, move your financial addresses, get local doctors etc. It saves on state income taxes and a big thing for us will be no estate taxes. I wouldn’t relocate to a low tax state just because of taxes. We’re retired and hate cold weather.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Plenty of people do this. Keep track of credit card statements in case you have to prove that you were actually there for 6 months.

Because OP is planning to keep their place here, no doubt will be here quite a bit, will continue to rely on our services, but wants to avoid paying taxes. Then they'll complain about how things are here, without putting their money where their mouth is. Not to mention they're likely to cheat and be here more than six months a year.

When doing your math, OP, don't forget you lose the homestead exemption on your house, the opportunity for a 50 percent reduction in your property taxes through the senior citizen discount, the right to register your car here and get zoned parking, etc. etc. etc. Plus it's just a shitty thing to do to the city and it makes you a cheapo. If you have to change your residency to avoid city taxes you're not comfortable enough to retire.

Yes, we have a second home in a much more friendly tax state. No, we don't consider this.

Well, you’re a fool.

Maybe. But I'm sure as hell not gonna start counting my days to save taxes.

OP isn't saying "we're finally empty nesters and can move to where we want and away from DC." Nope. She's saying that as empty nester she thinks it's "doable" to be here less than six months. So yeah it's all about structuring your very whereabouts around state incomes taxes. Pretty sad.

Guess OP is not getting a good return on her [too high of] taxes. Can't blame them one bit.

[Anonymous]

Anonymous wrote:Personally I think it's pathetic. But yea, sure you can do it.

Why is it pathetic?

Just know the rules of each state. Basically you have to prove to the one you are NOT in anymore as a full time resident that yes you actually don't live there more than 6 months of the year.
So track that, buy a home/condo in the new state, move cars, doctors, voter registration, etc to prove you moved.

[Anonymous]

Anonymous wrote:My retired relatives do this. They have a really nice Airstream trailer and spend at least 6 months of the year at an RV park in Florida.

You need to register your vehicles there, change your driver's license, and voting registration to help establish tax residency. One thing to watch for is that in low income tax states, the government finds other ways to raise revenue, like through property tax, personal property tax, or sales tax. For example Tennessee has no state income tax but sales tax is 7-9% depending on what city you're in. Texas has no state income tax but property tax is about 2% (around the DMV it's around 1%).

Obviously, states have to get their money from somewhere. In some it's property taxes, for others it's Estate/death taxes or sales tax. We live in a no income tax state and our estate tax and sales tax are high. so Is the gas tax (a more noticeable one in daily life)

[Anonymous]

Anonymous wrote:

Anonymous wrote:Plenty of people do this. Keep track of credit card statements in case you have to prove that you were actually there for 6 months.

Exactly. Local tech CEO Saylor got busted for this. In his case, he posted photos on Insta from his yacht in DC on days he claimed he was not in DC:

https://www.cnbc.com/2024/06/03/bitcoin-billionaire-michael-saylor-settles-dc-tax-fraud-case-for-40-million.html

Well you actually have to move and reside in the other place for 6months+.

We travel a lot so for us, proving we are somewhere 6 months of the year would be difficult, as we spend 3-4 months traveling and would want to split the rest between 2 places.

[Anonymous]

We did the opposite. We ended up moving from northern Virginia to a higher tax state in retirement (about 4 months ago), albeit a somewhat lower cost area.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Plenty of people do this. Keep track of credit card statements in case you have to prove that you were actually there for 6 months.

Exactly. Local tech CEO Saylor got busted for this. In his case, he posted photos on Insta from his yacht in DC on days he claimed he was not in DC:

https://www.cnbc.com/2024/06/03/bitcoin-billionaire-michael-saylor-settles-dc-tax-fraud-case-for-40-million.html

People have yachts "in DC"? This blows my mind. Doesn't time on a yacht mean like no location? Maritime?

[Anonymous]

I know people who live in MD but have claimed VA residency for years. They own a home in both places, but live in VA 0% of the time. Kids went to VA state schools, and private in MD prior to that. A lot of states don’t aggressively pursue people that do this, obviously, or they wouldn’t have been able to do this for 10+ years.


We are in the process of relocating to our second home, and have discussed this with our local (to second home) estate lawyer since it’s in a no income tax state. He advised keeping track of time but since it’s flying distance should be easy—for time out of the country he suggested leaving from 2nd home location to have that count as time here. Apparently California is very aggressive in pursuing people who do this, especially high earners, but I doubt MD or VA are. VA is often a “receiving state” as well, so doubt they care much. Maybe DC does, I don’t know.