Are you considering retiring to the Sunshine State? Establishing residency in Florida is not as simple as you may think!
Besides the warm weather, palm trees, and tropical drinks, there are also tax benefits to establishing domicile in Florida. Unlike New York, Florida does not have a state income tax or estate tax. In addition, there is no state gift tax in Florida. You may also qualify for the homestead property tax exemption, which is available to all Florida residents and permits up to a $50,000 reduction in property taxes.
In order to prevent New York from claiming that you are a New York resident and therefore subject to New York taxation, certain steps must be taken to establish residency. First, lets review the law in New York that defines a “resident” of New York. New York tax law defines a resident as follows:
an individual: (A) who is domiciled in this state or (B) who is not domiciled in this state but maintains a permanent place of abode in this state and spends in the aggregate more than one hundred eighty-three days of the taxable year in this state.
What exactly does this mean? New York law will treat a person as a resident if (1) they are domiciled in New York, or (2) they maintain a permanent place of abode in New York and spend 183 days within the state during the year. A permanent place of abode is a home that you maintain and that is suitable for year-round use. You do not have to own the home for it to be considered a permanent place of abode. It is also possible for a person to have more than one permanent place of abode.
Under the law, New York can treat a person as a resident even though they are not domiciled in New York. This highlights the difference between “residence” and “domicile”. A Court of Appeals case held that,
residence means living in a particular locality, but domicile means living in the locality with intent to make it a fixed and permanent home. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one’s domicile.
What steps should be taken to establish domicile in Florida?
A Declaration of Domicile should be filed with Clerk of the Circuit Court in the county that you have moved to. The application is available online or at the Clerk of the Circuit’s Court office. In addition, the Declaration of Domicile should be mailed to the New York State Department of Taxation and Finance.
Below is a list of steps to take to strengthen your case that you are a Florida resident:
Can New York challenge my status as a non-resident?
Yes. New York can audit your non-resident tax return. The audit can involve a very detailed look into your records to see if you truly are a non-resident. Thus, it is imperative that you take the steps mentioned above to establish your domicile in Florida and keep documentation to support your intent to permanently reside in Florida.
Will my estate planning documents drafted in New York be valid in Florida?
Under Florida law, a Last Will and Testament and Durable Power of Attorney that are valid under the state in which they were executed in will be accepted. Although, you may wish to consult with your attorney regarding executing new estate planning documents, including Wills, Powers of Attorney, and Health Care Proxies, to reflect you change in domicile. This would provide further evidence that you intend to make Florida your permanent and fixed home.
We recommend that you meet with your team of trusted advisors before relocating to Florida. Please contact our office with any questions.