Moving Residency for Tax Purposes - Anyone Done This?

[Anonymous]

Anonymous wrote:

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.

Many places do this. WA state has no income tax, it's illegal according to the state constitution. yet they put a "Cap gains tax" in place a few years ago on anything over $500K. Basically they are taxing stock options. 6 months later Bezos established his primary residency in FL (a state with no taxes, no estate tax etc). Why do you think he did that? Hmmmm.....
He's not the only one who has left. I mean why would the really wealthy stay and pay extra when it's easy for them to leave

[Anonymous]

Anonymous wrote: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.

That's the thing, you have to actually like where you are relocating to. And want to live there part time. Otherwise, it's not worth it (IMO)

[Anonymous]

Anonymous wrote: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.

Yes, CA is very aggressive about this. Have a wealthy friend who lives in FL and CA. They know all the rules for making certain they are tracking being in FL 50%+ of the time. Down to if your plane lands at a certain time you get to count the entire day as being in FL (they fly private so easy to do).
CA has tons of wealthy who attempt to avoid taxes (rightfully so).

[Anonymous]

Anonymous wrote:Why would you do that?

You voted in these high taxes and social policies.

Stay and pay your fair share for the things you voted in.

Don't go to another state with better policies to avoid paying for the policies you voted in for everyone else.

Ummm...I didn't "vote in these high taxes". I already pay plenty. If it's legal to have a 2nd residence, why not?

[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.

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.

OP again. We plan to travel a lot as well. But, as a PP suggested, the travel time out of the country can count as part of your 183 days in the new residence. Looking at it that way, I don't anticipate this being difficult at all. Again, our kids will be away at college or on their own by the time this is implemented.

To those of you who think this is somehow wrong: have you never talked to a financial planner or tax attorney? This is the first thing they suggest, especially if you already own a vacation home in a lower tax bracket state. As one told us bluntly, "you don't want to die a DC resident if you can help it."

+1

If you want to have 2 residences, why not take advantage of lower taxes? Most who do that already pay a very high tax rate, we don't want to also have most of our estate taxed at 30-40% at the state level either. So we work to avoid that within the law

[Anonymous]

Anonymous wrote:

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?

NP. I'm with you. If you're well-to-do who wants the hassle.

Well for us, it could save us $5-7M in the next 5 years alone, and $10M+ in state estate taxes when we die. The people I know who already do it are worth $100M+ already so they save tons.