Op-ed: Thinking of moving your primary residence to a tax-advantaged state? Take these steps

It's not antithetic for affluent taxpayers to relocate from high-tax states to low-tax states. There's grounds successful colonisation trends: Texas and Florida — neither of which person a authorities income taxation — were the states with the biggest colonisation increases from 2020 to 2021, according to the latest U.S. Census Bureau data. Much of that maturation is coming astatine the disbursal of higher-tax states specified arsenic California, New York and Illinois.

These days, it is precise communal for affluent families to ain residences successful much than 1 state, making relocation adjacent easier. However, the world is that immoderate authorities that does person an income tax, and successful which an idiosyncratic owns a home, volition person a vested involvement successful asserting that the residence successful their authorities is that person's domicile.

In applicable terms, having domicile successful a authorities means that authorities tin enforce its respective income taxation connected each the income reflected connected the individual's national income taxation return, careless of the root of that income. This is 1 of the main reasons that galore radical see relocating.

Potentially adding to the inclination of specified moves is simply a question of states' efforts to find caller ways to taxation the rich. These bills scope from imposing a "wealth tax" connected the intrinsic gains from stocks and securities and creating peculiar income taxation brackets targeting the affluent to reducing exemptions connected inheritance taxes.

But earlier you telephone the moving van, recognize that authorities taxation, including authorities income taxation arsenic good arsenic authorities property and inheritance taxes and imaginable wealthiness taxes, is lone 1 origin to see arsenic you measure changing your domicile.

Other areas to see see rules that govern plus protection, spot administration, trustee enactment and property administration. Some who redomicile to a authorities with nary income taxation whitethorn find that they are paying the authorities successful different ways, specified arsenic higher inheritance, spot and/or substance taxes.

That's wherefore the authorities you take arsenic your domicile is specified an important decision. That determination is adjacent much challenging considering that states often person antithetic rules defining what they see domicile.

Some usage alleged "bright line" tests; for instance, a definite fig of days successful and retired of the state. Others usage a "preponderance of evidence" attack that considers wherever you vote, wherever your driver's licence is issued, wherever your advisors are located and galore different factors.

Since I personally redomiciled from Minnesota to Florida and person assisted galore of my clients successful doing the same, I americium often asked astir "the close way" to bash it.

The astir important happening is to ensure, upon inspection, that you tin show that the determination is existent and not conscionable connected paper. Simply getting a driver's licence oregon registering to ballot successful the caller authorities volition apt not beryllium enough. Not surprisingly, states with precocious income taxes bash not similar to suffer taxation gross from affluent families and volition precise often audit taxpayers who accidental they've redomiciled.

When I person a lawsuit who is superior astir changing domiciles, we spell done a checklist of the things they should bash to beryllium they person severed the transportation to their erstwhile authorities of residence. The much grounds you tin nutrient to amusement that you are domiciled in, and not conscionable a nonmigratory of, your caller state, the amended disconnected you'll be, adjacent if it lone seems to beryllium supporting evidence. Items to see include:

• Buy oregon lease property. The archetypal measurement successful redomiciling should beryllium to acquisition oregon rent a residential location successful the caller domicile state. If the residence is simply a rental, the word of your lease should beryllium for astatine slightest 1 year.

• Log your travels. Make definite to walk astatine slightest 183 days per twelvemonth extracurricular your aged location state. Limit instrumentality trips to your anterior location and support a grounds of wherever you walk your clip erstwhile you are not successful the caller state.

• Change your licence and registration. Obtain a caller driver's licence and registry immoderate automobiles oregon boats successful the caller state. If you support immoderate licenses from your anterior home, marque definite they bespeak that you are a nonresident.

• Register to vote. Register to ballot successful your caller state. Write to the registrar of voters astatine your anterior home, too. Mention your alteration of domicile and inquire that you beryllium removed from voting lists.

• File a declaration of domicile. In immoderate states, similar Florida, it is imaginable and advisable to record a declaration of domicile successful which you attest to the fact, nether punishment of perjury, that your domicile is the caller state.

• Move slope accounts and harmless deposit boxes. It's hard to marque the lawsuit for changing domiciles if each your fiscal holdings are successful the aged state.

• Declare a alteration of address. Send notification of your alteration of code to family, friends, concern associates, nonrecreational organizations, recognition paper companies, brokers, security companies and mag subscription offices.

• Establish a caller location base. When you travel, effort to instrumentality to the caller state. When you marque ample purchases, marque them successful the caller state. Keep your household heirlooms, furnishings and keepsakes successful the caller state.

• Change ineligible documents to bespeak residency. Upon redomiciling, you indispensable update your volition and spot and property documents. Make definite that these documents bash not place you arsenic a nonmigratory of different state. Also marque definite your national taxation returns bespeak your caller address.

• Develop section affiliations. Join section organizations successful the caller state, specified arsenic clubs and spiritual groups, and enactment successful section charitable activities.

• If it exists, use for a homestead exemption. In immoderate states, specified arsenic Florida, a homestead exemption volition beryllium counted against your existent property taxes.

Each idiosyncratic has a unsocial taxation situation. Please consult with your fiscal and taxation professionals erstwhile considering a alteration successful domicile.

— By Paul J. Ayotte, founding spouse and lawsuit advisor astatine Fidelis Capital