Florida

[RNuse09]

I had someone tell me that their previous accountant said that it would be a bad idea to calim residency in Florida, he currently lives in PA. The client wanted to do this to get cheaper healthcare through the state, the taxpayer is around 60. The reason was becasue he would have to pay tax on the rental properties that he has in PA. Does this make any sense? I am unfamilar with Florida returns, other then that I know there is no income tax in FL.

Thanks,

[Jesse]

Possibly the accountant meant that even if is primary residence was in Florida he would still need to file a Nonresident PA return and pay PA taxes on the rental properties?

We have many snowbirds here in Wisconsin and it just amazes me how many suddenly want to become Florida residents so they don't have to pay state income taxes. I try to explain that for one, you can not just "say" your primary residence is in Florida, you need prove domicile.

Second, look at the BIG picture, what you save in income taxes may just end up costing more in other expenses. If you rent in Florida and Wisconsin is no longer your main residence your home insurance increases because it is unoccupied for most of the year. Check out the car insurance rates. If you hunt and fish you pay more for out of state licenses. Etc, etc .....

[Kram BergGold]

Home sale

The other problem with declaring FL residencey is after 3 years the gain on the primary residence in PA will be taxed. I think the TP heard the CPA incorrectly re the rental properties.

[oceanlovin'ea]

no state tax

Florida has no state tax. So the only thing I can think of is that he will still have to do a PA return for the rental income. But I don't see that as reason not to become a Florida resident. As a Florida resident, he would only pay PA on his income from PA (the rental income). If he stays a PA resident, he pays state income tax on all his income. Sounds like being a Florida resident would make sense.

I don't know if there would be other issues.

Linda, EA