Curious snowbird?

[Scuba]

.
There is a lot more to it than just 6 months and a day.. if you are still homesteading elsewhere, drivers licenses and car registrations elsewhere, addresses on financial accounts elsewhere, etc and just rent in FL for 6 months and a day your home state is unlikely to accept that you are a Florida resident... particularly if it is NY.

Or CA. I’ve talked with several folks who thought about this or tried this to get out of CA taxes. The FTB makes it quite difficult from what I’ve heard. One has to be very diligent about changing voter registration, drivers’ licenses, etc. but from what I understand several other “facts and circumstances” are taken into consideration, such as:
- Do you have healthcare providers in CA? If you’re doing your annual checkups in CA and have ongoing relationships with docs in CA, it’s going to be harder to establish that you aren’t a resident.
- Is the property out of state comparable to your CA residence? I’ve been told you can’t have a nice big home in CA and rent a small condo out of state and claim you’re an out of state resident. The lifestyles have to be somewhat comparable.

One option we’ve considered is to rent our home in CA out to a long-term tenant (one year lease). Then we could travel/live other places most of the year but come back to CA for social visits. However we’d have to give up actually living here most of the time, which isn’t appealing at least on a long-term basis for us.

 

[Sunset]

Or CA. I’ve talked with several folks who thought about this or tried this to get out of CA taxes. The FTB makes it quite difficult from what I’ve heard. One has to be very diligent about changing voter registration, drivers’ licenses, etc. but from what I understand several other “facts and circumstances” are taken into consideration, such as:
- Do you have healthcare providers in CA? If you’re doing your annual checkups in CA and have ongoing relationships with docs in CA, it’s going to be harder to establish that you aren’t a resident.
- Is the property out of state comparable to your CA residence? I’ve been told you can’t have a nice big home in CA and rent a small condo out of state and claim you’re an out of state resident. The lifestyles have to be somewhat comparable.

One option we’ve considered is to rent our home in CA out to a long-term tenant (one year lease). Then we could travel/live other places most of the year but come back to CA for social visits. However we’d have to give up actually living here most of the time, which isn’t appealing at least on a long-term basis for us.

Intuitively, that is the definition of residence, where you live

 

[pb4uski]

.....I’ve been told you can’t have a nice big home in CA and rent a small condo out of state and claim you’re an out of state resident. ....

If owning a nice vacation home was your only tie to CA (IOW, homestead, licenses, bank accounts, investments, SS and pension deposits, etc. were elsewhere) and you spend less than 6 months there, then I think they would have a hard time prevailing simply because your CA vacation home was nicer than your residence.... given the pigs that they are I don't doubt that they would try, but I don't think that they would prevail.

 

[Freedom56]

Or CA. I’ve talked with several folks who thought about this or tried this to get out of CA taxes. The FTB makes it quite difficult from what I’ve heard. One has to be very diligent about changing voter registration, drivers’ licenses, etc. but from what I understand several other “facts and circumstances” are taken into consideration, such as:
- Do you have healthcare providers in CA? If you’re doing your annual checkups in CA and have ongoing relationships with docs in CA, it’s going to be harder to establish that you aren’t a resident.
- Is the property out of state comparable to your CA residence? I’ve been told you can’t have a nice big home in CA and rent a small condo out of state and claim you’re an out of state resident. The lifestyles have to be somewhat comparable.

One option we’ve considered is to rent our home in CA out to a long-term tenant (one year lease). Then we could travel/live other places most of the year but come back to CA for social visits. However we’d have to give up actually living here most of the time, which isn’t appealing at least on a long-term basis for us.

I am running through the list of items in FTB publication 1031 which the FTB referred me to. They admitted that this publication was for people who work in California but live elsewhere and those who are on temporary assignment out of state. There is a big difference between working in California and being retired in California where your source of income is out of state.

Factors to consider are as follows:

• Amount of time you spend in California versus amount
of time you spend outside California.

The person at FTB stated that 9 months in California is the cutoff for determining part-year resident. Above 9 months you cannot be considered a part-year resident

• Location of your spouse/RDP and children.

With me

• Location of your principal residence.

We have three residences and the FTB and IRS are aware of that

• State that issued your driver’s license.

California but can change that quickly to Florida

• State where your vehicles are registered.

California, Florida, Switzerland

• State where you maintain your professional licenses.

Never needed one for my profession unless IEEE counts but they are in New Jersey

• State where you are registered to vote.

California but that can be changed

• Location of the banks where you maintain accounts.

All outside California except Charles Schwab

• The origination point of your fnancial transactions.

Everywhere - Most of my transactions are online - I haven't been to a bank teller in over 15 years

• Location of your medical professionals and other
healthcare providers (doctors, dentists etc.),
accountants, and attorneys.
California

Location of your social ties, such as your place of
worship, professional associations, or social and
country clubs of which you are a member.

All over the world - I'll use Facebook and Linkedin connections as proof

• Location of your real property and investments.

All over the world

• Permanence of your work assignments in California.

Not applicable

The person I contacted at FTB stated that I could technically qualify as a part-year resident. They use this provision to trap out of state snowbirds into paying California taxes. They use the address on 1099s to determine your sources of income. Since I want my confirmation in writing, they asked me to detail my circumstances in a letter and send it to the FTB for a formal determination.

I'm not giving up yet.

 

[pb4uski]

Yes, but aren't you really falling into their trap? The end result that is best for you is to be a non-resident who periodically spends time at their California vacation home rather than a part-year resident.

A part-time resident would pay income tax on all income while they are in California and on California sourced income when they are absent from California. A non-resident only pays income tax on California sourced income.

A non-resident can still own property and spend time in California, and would be taxed on any California sourced income.

Given the amounts that I presume are involved, you would be wise to seek counsel from a CPA or lawyer as to how to best arrange your financial life to avoid California state income taxes. I would limit my California connection to the vacation home and perhaps a car that you keep at the vacation home and make everything else Florida or Switzerland.

 

[kgtest]

Depending on income situation, 6 months and a day in Florida can pay for the place in Florida.

Already have the plane booked for my trip to buy a Naples property. It's a no brainier with my tax situation.

 

[LakeRat1]

9 Months after retiring, we purchased a small PM Home in Ft. Myers, became FL residents, now saving 17K per year between renting for 4 months and taxes..... FL for 8 Months, Missouri for 4 months ..... Life is good Retired

 

[Scuba]

Yes, but aren't you really falling into their trap? The end result that is best for you is to be a non-resident who periodically spends time at their California vacation home rather than a part-year resident.

A part-time resident would pay income tax on all income while they are in California and on California sourced income when they are absent from California. A non-resident only pays income tax on California sourced income.

A non-resident can still own property and spend time in California, and would be taxed on any California sourced income.

Given the amounts that I presume are involved, you would be wise to seek counsel from a CPA or lawyer as to how to best arrange your financial life to avoid California state income taxes. I would limit my California connection to the vacation home and perhaps a car that you keep at the vacation home and make everything else Florida or Switzerland.

I wonder how California-sourced income is defined. For example, I worked for one employer in several states, but probably 70% of my tenure there was in CA. So would 70% of my pension from that employer be CA-sourced? Most of my investments and financial transactions are also online so I’m not sure whether any investment income would be characterized as CA-sourced?

 

[Scuba]

Intuitively, that is the definition of residence, where you live

Exactly

 

[pb4uski]

I wonder how California-sourced income is defined. For example, I worked for one employer in several states, but probably 70% of my tenure there was in CA. So would 70% of my pension from that employer be CA-sourced? Most of my investments and financial transactions are also online so I’m not sure whether any investment income would be characterized as CA-sourced?

I think California income would be income from any property that's titled or the address is in California.

 

[Freedom56]

I wonder how California-sourced income is defined. For example, I worked for one employer in several states, but probably 70% of my tenure there was in CA. So would 70% of my pension from that employer be CA-sourced? Most of my investments and financial transactions are also online so I’m not sure whether any investment income would be characterized as CA-sourced?

I'm going through publications now from the FTB. The CPA and "tax specialist" that I know can't deal with the problem until after the tax filing deadline. This is their busy season. The FTB has been somewhat helpful and referred me to the following publications for their auditing guidelines:

https://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/2000.pdf
https://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/3000.pdf
https://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/4000.pdf

With respect to sourcing of income, the guidelines (from 4000.pdf) are:

When scoping a tax return for the residency issue, note the following information
disclosed on the tax return:
 Responses to the residency questions contained on Schedule CA (540NR).
 Address on the return.
 Address on the W-2s and 1099s.
 State tax information on the W-2s.
 Other addresses disclosed on the return.
 Employer's address.
 Address of tax preparer.
 Social security number of taxpayer, spouse, and dependents.
 Federal identification numbers of partnerships, S corporations, and LLCs.
 Location of assets that were sold or exchanged.
 Location of rentals and other investments.
 Location of banks and financial institutions.
 Location of farms on Schedule F.
 Taxpayer's occupation.
 Moving expense information (including reimbursement on W-2).
 Large income from intangibles.
 Income, expenses, and deductions which may indicate connections within and without
California.
 Schedule C activity and address.
 Investment activity (determine whether the taxpayer maintains a passive or active role
in the activity).
 Closely held corporations.
 Other state tax credit.
 Other audit issues.

 

[omni550]

A few years ago, while snowbirding here in Florida, I attended two free presentations on "Setting up Florida domicile". (There are many offered here each season by financial and legal folks.)

They shared some stories. Many 'northern' states hate to lose the taxes being paid by folks who are retired and spend time elsewhere for part of the year. It seems as the states who stand to "lose the most" (those with high tax rates), have spent considerable energy in the endeavor to track down/keep tabs on their (former) residents. Some states have actually relocated agents to FL for the season who drive around and monitor the vehicles sporting plates from their northern state, others have pulled their cell phone records to see which cell towers get "pinged" (IOW, you may be claiming to be a resident elsewhere, but if your cell phone is mostly pinging the towers in your northern location, it's fairly clear that you really aren't residing elsewhere, etc.)

The usual advice -- get cars registered, plated, and insured in your new domicile, move your bank accounts to your new domicile, file taxes using new domicile address, get all accounts with monthly payments (utilities, cell phone, credit cards, etc.) switched to your new domicile, change the address at all your financial institutions to your new domicile, open accounts in a local bank, find doctors at your new domicile, join a the local church/synagogue in your new domicile, if you belong to national clubs, switch your address to the new domicile, get library cards at your new domicile, etc. etc. Truly move the nexus of your life to the new domicile. You can still go back to visit your old haunts, but you are residing in your new domicile.

omni

 

[Freedom56]

A few years ago, while snowbirding here in Florida, I attended two free presentations on "Setting up Florida domicile". (There are many offered here each season by financial and legal folks.)

They shared some stories. Many 'northern' states hate to lose the taxes being paid by folks who are retired and spend time elsewhere for part of the year. It seems as the states who stand to "lose the most" (those with high tax rates), have spent considerable energy in the endeavor to track down/keep tabs on their (former) residents. Some states have actually relocated agents to FL for the season who drive around and monitor the vehicles sporting plates from their northern state, others have pulled their cell phone records to see which cell towers get "pinged" (IOW, you may be claiming to be a resident elsewhere, but if your cell phone is mostly pinging the towers in your northern location, it's fairly clear that you really aren't residing elsewhere, etc.)

The usual advice -- get cars registered, plated, and insured in your new domicile, move your bank accounts to your new domicile, file taxes using new domicile address, get all accounts with monthly payments (utilities, cell phone, credit cards, etc.) switched to your new domicile, change the address at all your financial institutions to your new domicile, open accounts in a local bank, find doctors at your new domicile, join a the local church/synagogue in your new domicile, if you belong to national clubs, switch your address to the new domicile, get library cards at your new domicile, etc. etc. Truly move the nexus of your life to the new domicile. You can still go back to visit your old haunts, but you are residing in your new domicile.

omni

I agree with what you are saying. The original decision to buy a property in Florida was purely as an investment. We paid pennies on the dollar for the property in 2011 when people in Florida were thinking the world was going to end. Our plan was to hold the property for a few years and flip it to a snowbird living in the Northeast. But after visiting a few times per year over the past 6 1/2 years we actually liked it. The water is warmer than California. There lots of spots for diving or snorkeling. Cycling is very nice around Palm Beach. It's lush and green. It was also a good hub for travelling to the Caribbean Islands or the east coast. We met a lot of interesting people from the North East. Now with the Brightline train service, we can hop on a train and visit Ft Lauderdale or Miami without driving. The new train service is one of the best anywhere. We wouldn't stay there all year around. The summers are pretty humid there. Unlike California, it's pretty flat. My wife does not want to sell now, so we are looking at ways to leverage the property for a tax benefit.

 

[Scuba]

I'm going through publications now from the FTB. The CPA and "tax specialist" that I know can't deal with the problem until after the tax filing deadline. This is their busy season. The FTB has been somewhat helpful and referred me to the following publications for their auditing guidelines:



https://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/2000.pdf

https://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/3000.pdf

https://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/4000.pdf



With respect to sourcing of income, the guidelines (from 4000.pdf) are:



When scoping a tax return for the residency issue, note the following information

disclosed on the tax return:

 Responses to the residency questions contained on Schedule CA (540NR).

 Address on the return.

 Address on the W-2s and 1099s.

 State tax information on the W-2s.

 Other addresses disclosed on the return.

 Employer's address.

 Address of tax preparer.

 Social security number of taxpayer, spouse, and dependents.

 Federal identification numbers of partnerships, S corporations, and LLCs.

 Location of assets that were sold or exchanged.

 Location of rentals and other investments.

 Location of banks and financial institutions.

 Location of farms on Schedule F.

 Taxpayer's occupation.

 Moving expense information (including reimbursement on W-2).

 Large income from intangibles.

 Income, expenses, and deductions which may indicate connections within and without

California.

 Schedule C activity and address.

 Investment activity (determine whether the taxpayer maintains a passive or active role

in the activity).

 Closely held corporations.

 Other state tax credit.

 Other audit issues.

Thank you, very helpful information.

 

[Sunset]

I agree with what you are saying. The original decision to buy a property in Florida was purely as an investment. We paid pennies on the dollar for the property in 2011 when people in Florida were thinking the world was going to end. Our plan was to hold the property for a few years and flip it to a snowbird living in the Northeast. But after visiting a few times per year over the past 6 1/2 years we actually liked it. The water is warmer than California. There lots of spots for diving or snorkeling. Cycling is very nice around Palm Beach. It's lush and green. It was also a good hub for travelling to the Caribbean Islands or the east coast. We met a lot of interesting people from the North East. Now with the Brightline train service, we can hop on a train and visit Ft Lauderdale or Miami without driving. The new train service is one of the best anywhere. We wouldn't stay there all year around. The summers are pretty humid there. Unlike California, it's pretty flat. My wife does not want to sell now, so we are looking at ways to leverage the property for a tax benefit.

If you rent out your CA house, then along with other changes, like living in FL for 8 months, (and banks/car registration/etc) it seems it would be easy to claim not living in CA anymore.

 

[Scuba]

If you rent out your CA house, then along with other changes, like living in FL for 8 months, (and banks/car registration/etc) it seems it would be easy to claim not living in CA anymore.

That is the conclusion we came to - if we want to get out of being CA residents for tax purposes, we should rent out our home here and rent a place to stay when we visit. Probably more hassle than we’re willing to deal with but that could change given unfavorable trends in cost of living/taxes in CA.

 

[ivinsfan]

As others have said, it's a personal decision, but we leave for the Gulf Coast in a couple weeks, and I can't wait (this will be our 8th winter of snowbirding). We live in northern Michigan, so there's not a heck of a lot for me to do here until April, other than shovel snow and bundle up to walk the dog twice a day. Down south, I will be kayaking, fishing, walking around town with just a light shirt on, sitting outside in the sun by the water, grilling dinner outside.......it's great. I can't recall ever being bored down there. Absolutely no comparison to staying here for the next few months. As for the cost, we have a travel budget and just look for a rental house that fits the budget (for the length of time we want to stay). Once we've committed the money for that, and budgeted for other stuff like food and entertainment, I don't even give cost a thought after that......I just enjoy myself.

Other then the cost of gas and mileage on your car, the price of the rental condo is basically the cost of the trip. You'd be eating food and entertaining yourself at home too. Would you mind sharing where you go on the gulf coast. We have done a lot of snowbird trips out West but due some of my family relocating are looking at trying to go South next year.

 

[Freedom56]

If you rent out your CA house, then along with other changes, like living in FL for 8 months, (and banks/car registration/etc) it seems it would be easy to claim not living in CA anymore.

At this point my wife would never consider renting our house out. We have done that with other property that we used to own and we have seen first hand what happens to rental properties. She doesn't want to see our home get destroyed. My wife has OCD when it comes to keeping a house clean and organized. The banks are not an issue for us. We will get Florida driver's licences and change our voter registration. Many people own homes here that are not domiciled full time.

 

[brucethebroker]

Other then the cost of gas and mileage on your car, the price of the rental condo is basically the cost of the trip. You'd be eating food and entertaining yourself at home too. Would you mind sharing where you go on the gulf coast. We have done a lot of snowbird trips out West but due some of my family relocating are looking at trying to go South next year.

Tampa and south to get the best weather all winter, the further south the better. Prices increase in Estero, Bonita Springs, Naples and any island (Marco, for example).

 

[kcowan]

I have many friends who are snowbirds. Some of them rent. Some have a trailer in the sunny location. And some own homes there. Those are the people for whom money is no, or just a little, object. One couple bought a completely furnished condo at an estate sale. And they do sometimes run into problems, such as health issues that spark a quick exit, or inability to drive back to base, vehicle woes, etc. My impression is that the people who successfully develop and maintain two circles of friends are extroverts who spend the maximum possible time at each location and take part in every possible activity. I don’t think it’s for me.

We have developed deeper relationships with our snowbird people than with the old friends back north. Part of it is the freedom to select new people based on how we have evolved, rather that how we were.

We have also discovered the added benefit that the COL in PV is 40% of our PNW lifestyle and we have adjusted up to 60% but still have a huge buffer in our retirement plan. Plus we are able to selectively rent our northern place for some of the 6 months, offsetting more expense. We do it for carefully-selected guests, not for the revenue. Home swapping helped prepare us.

Life is good.