Question:
I recently bought a home in Florida and my husband owns a home in Wisconsin. Can we (as a married couple) be residents of different states?( I want to be a Florida resident and my husband a Wisconsin resident for tax benefits.)
Answer:
Well it is theoretically possible, however, married or single is not the determinant. Job, length of stay, etc. is.
If you have a job, a drivers license, or stay in a state for 6 months you are a resident. If you are in a state more than 30 consecutive days, most have requirements that you register for a drivers license.
So can you claim, that you do not stay in Wisconsin for 30 consecutive days, while you husband can claim he does not do so in Florida?
Do you earn no money in Wisconsin, while he earns no money in Florida? Are you willing to give up the $250,000 exemption in cap gain savings on the Wisconsin house, and your husband give it up on the Florida residence?
And if found driving in Wisconsin on a Fl Drivers License what is the penalty? How many times do you think you can be charged with that before it is not worth the work?
You didn’t mention what type of work each of you do? Are you employees or do you have your own business? If you have your own business there may be easier ways to handle the tax issues, while getting FAR greater savings than trying to avoid a portion of the 7.9% Wisconsin tax.
Follow-up Question:
We are both retired. My husband who would be the Wisconsin resident has a pension. I, who would want to be the Florida resident, am on Social Security Disability. My name is on the Florida residence we bought and my husbands is on the Wisconsin residence. Neither of us earn any money in either state besides the mentioned disability and the pension. I would be in Florida more than Wisconsin and my hubby would be in Wisconsin more than Florida(over the required 6 months and 1 day.) I did check with motor vehicle and it doesn’t matter where you have your drivers license to drive in any state. I would of course have a Florida drivers license and my hubby would have the Wisconsin drivers license. Wisconsin doesn’t give a break on the property tax like Florida does on theirs, unless you are low income in Wisconsin. My husband would save on his hunting fees and he does every type of hunting in Wisconsin so it all adds up. I would help us save on the property tax bill in Florida . Does that help in justifying us to each be residents of a different state? That was my main question if it is legal to do just that. Thanks for any more insight you can give to this.
Follow-up Answer:
Like I said, if you can live by the rules then it is theoretically possible.
To clarify on the Drivers License. You certainly can drive in any state on any drivers license. It is an issue of the state having the right to require that anyone residing in their state have a local state issued drivers license. Most states have multiple requirements, one of which that anyone that is in the state for 30 or more consecutive days is no longer pass through, they are residing (or if you get a job it is immediate).
Second Follow-up Question:
What about all the people that are snowbirds to Florida, AZ , TX or wherever?? They are there much longer than 30 days (usually 3 to 4 months during the winter months). Never heard that people couldn’t drive in the winter months state while they were not visiting there. Now as far as the $250,000 exemption for selling a home don’t we own the homes separately and why couldn’t we just sell them when the time comes to do so? (We actually are going to at some point put the homes under our daughter s names(We have two daughters, so one home under one and one under the other)We would do it as life estates. Hope that helps with more info.
Second Follow-up Answer:
You can each sell you own home and get a $250,000 exemption. You cannot both sell one home and get a $500,000 exemption, or in theory sell both homes and get 1 million dollars in exemption.
As long as you die before 2010 then your daughters would get a step up in basis (they would owe no tax at sale) after 2010, it is up in the air. They may have to take the homes at your adjusted basis and pay taxes on the gain at sale.
As to the enforcement of registration laws, in this country as all laws, they are selectively enforced.