My family and I are planning a 15 month to 2 year RV trip. We're renting our home and hitting the road for at least 15 months. We're going to see how it goes but we may come back and get a seasonal rental near the beach for 9 months, then go out the next summer again, or we may just stay on the road for the full two years. We want to give our tenants at least 2 years before we consider moving back to our house (we live near military base with very frequent 2 year deployments). We live in NJ.
NJ is an exteremly expensive place to live, taxes, insurance, registration fees, etc..
I'm wondering whether I should change my residency for those two years. Someplace without a state income tax and lower health and car insurance rates. I could end up giving myself a 10% raise or more depending on the state.
However, considering I am going to be owning a house in NJ (that we will be renting out) and my business is incorporated in NJ, I'm not sure if it's going to cause problems. Anyone in a similar situation or have any advice?
My advice would be to spend some bucks for a lawyer's opinion.
RRUGG
2008 Dodge 2500 QC 4x4 SB Cummins 6 speed auto 3.73
1997 Holiday Rambler 29FK travel trailer
2006 Summit 22RB travel trailer
2003 Dodge Grand Caravan Sport
Bob & Grace professional retirees
Good Sam life members
love4god wrote: I'm wondering whether I should change my residency for those two years. Someplace without a state income tax and lower health and car insurance rates. I could end up giving myself a 10% raise or more depending on the state.
We live in California and one of the factors we'd have to consider is the upcoming college education of our daughter. If we gave up our California residency, her tuition would quadruple at a minimum.
There is an organization called Escapees. Escapees RV Club This is a site for RVers that are on the road full-time. You might want to visit their website and see what others have done.
MFinCA
2004 Homestead Settler 255RS
1999 Chevrolet Suburban 2500
You can own real estate in any state you want and not be a resident of that state. If your state does over a lower tax rate for owner occupied houses, you would not be able to claim that. You may be able to benefit form some tax deductions for your house being rental property. Not sure when you convert it back to your primary residence, however. I own a home in Georgia, which is not my primary residence. I claim South Dakota as my primary residence, and since I don't reside 12 months in Georgia, nor do I claim homestead exemption (Georgia's tax break for home owners), it is perfectly legal.
Change your NJ corp over to a Nevada corp and change your residency to Nevada as well since you will be living in your RV, its OK, Nevada has little to no corp tax, no income tax, no inheritance tax, in fact the tax word is almost illegal here, 'not really', if you look deep and hard into the Nevada corp you can save thousands in tax here, have your renter pay the rent to the NV corp and put the money in a bank here and NJ cant touch it... I know this because I have a NV corp and it saves me thousands a year...
There's a potential problem lurking here -- Residency is based on intention -- If you leave and them come back, an astute state with the right laws may claim that you were always a resident. I have seen something like this happen with Virginia and a USAF family deployed from VA to Germany and unfortunately back to VA -- Last I heard, they were involved in legal fuss with VA for state income tax on the Germany time...
timmac wrote: Change your NJ corp over to a Nevada corp and change your residency to Nevada as well since you will be living in your RV, its OK, Nevada has little to no corp tax, no income tax, no inheritance tax, in fact the tax word is almost illegal here, 'not really', if you look deep and hard into the Nevada corp you can save thousands in tax here, have your renter pay the rent to the NV corp and put the money in a bank here and NJ cant touch it... I know this because I have a NV corp and it saves me thousands a year...
I will do the research, but in my opinion, this answer is WRONG! The NJ corp is taxable wherever it conducts business regardless of where it is incorporated!
NJ will tax the rental income to the owner of the property wherever they are, because the income (real estate rental income) is sourced to the state in which the real estate is located. In the OP's case, that is NJ! Even if OP lives in NV, NJ will STILL tax the rent income, legally! Transferring the house to NV corp would make ZERO difference!!!!!!!
Likewise, you would never consider transferring a personal residence to a corporation, LLC or partnership anyway, because then the gain on it, if any, is subject to income tax, unlike the first XXX,000 of dollars of gain if you own it personally!
Here's the "Five Minute" Research (My answer above is correct):
NJ Tax Code
NJ - Tax Code §54:8A-32 Computation of gross income of taxpayer
Except as otherwise provided in this act or by regulations pursuant to this act, a taxpayer shall compute his gross income by totaling his gains, losses, profits and income derived from salaries, wages or compensation for personal services, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property of whatever nature, growing out of the ownership or use of or interest in such property; also from interest, rent, royalties, dividends, securities, or the transaction of any business carried on for gain or profits and income derived from any source whatever within the source State, including prizes and awards (other than those primarily in recognition of some achievement in the arts, sciences or public interest without active entry by the recipient and without requirement that he render substantial future services as a condition), or gains or profits or income derived through estates or trusts by the beneficiaries thereof, whether as distributed or distributive shares. In any case, the term "gross income" shall include capital gains or capital losses only to the extent provided in section 39 of this act.
-----------
(As amended by Ch. 129, Laws 1961, effective December 22, 1961.)
Pete D wrote: There's a potential problem lurking here -- Residency is based on intention -- If you leave and them come back, an astute state with the right laws may claim that you were always a resident. I have seen something like this happen with Virginia and a USAF family deployed from VA to Germany and unfortunately back to VA -- Last I heard, they were involved in legal fuss with VA for state income tax on the Germany time...
See lawyer!
Or a CPA. Not E-Advice! Intent is the answer, but a fuzzy answer based on many criteria as follows:
This is generally a factual determination under the laws of the states addressed. The specific factors applied by each state may vary, and dependent upon each state, the absence of factors may or may not be important in said state. Additionally, the presence or absence of factors in other states may or may not effect another states’ determination. Additionally, such factors may, or may not be indicative of residency if the individual holds or exhibits any indicated items, dependent upon that specific state. These factors, derived from numerous different sources, may include:
Where a person’s habitation is fixed, without any present intention of removal, and to which, whenever absent, that person intends to return (the “State of Mind” of the individual);
A person generally will have only one domicile at any particular time. Once shown to exist, a domicile shall generally be presumed to continue until the contrary is shown. The absence of any intention to abandon an existing domicile shall be considered to be equivalent to the intention to retain the domicile;
A person who leaves a domicile to go into another jurisdiction for temporary purposes generally is not considered to have lost the domicile. The mere intention to acquire a new domicile, without the fact of physical removal, generally doesn’t change a person’s domicile, and the fact of physical removal from a person’s domicile, without the intention to remain absent, generally doesn’t change that person’s domicile;
A person shall generally be considered to have abandoned a domicile on the date that the person leaves a state without any intention to return to that state;
A place where a person’s immediate family is domiciled is generally that person’s domicile. The domicile of a person who is married shall be the same as the person’s spouse unless there is affirmative evidence to the contrary, the husband and wife are legally separated, or the marriage has been dissolved;
When a person has made a home at any place with the intention of remaining there indefinitely and the person neither lives at the home in which the person’s family lives nor intends to do so, then that person may be deemed to have established a domicile separate from that person’s family; and
The domicile of a child’s parents is generally the domicile of the child. The domicile of the parent who has legal custody of the child shall be the domicile of the child.
Additional factors may be considered in determining whether or not a person’s domicile is in a state, although none of these factors generally shall, by itself, be a determinant of a person’s domicile:
The percentage of time that the person is physically present within a state and the percentage of time that the person is physically present in each jurisdiction other than said state;
The location of the person’s domicile for the prior year;
The location at which the person votes or is registered to vote, except that casting an illegal vote generally does not establish a domicile for income tax purposes;
The person’s status as a student, or as parent of a student in said state;
The location of services performed by the person in the course of employment;
The classification of the person’s employment as temporary or permanent;
The change in the person’s living quarters;
The person’s ownership of other real property;
The jurisdiction in which the person has been issued a valid driver’s license;
The jurisdiction from which any motor vehicle registration was issued to the person and the actual physical location of the person’s vehicle or vehicles;
The purchase of any resident fishing or hunting licenses by the person;
The location of established banking relationships;
The location of established professional relationships with healthcare providers;
The location of established professional relationships with attorneys;
The location of established professional relationships with accountants;
The location of established professional relationships with professional investment advisors;
The location of established professional relationships with insurance agents or providers;
The filing by the person of a tax return, report, or application as a state resident or a nonresident individual, including school tuition;
The fulfillment or failure to fulfill by the person of a tax obligations required of a resident;
The address where personal mail is received by that person and not subsequently forwarded;
The location of any school that the person or the person’s spouse attends and whether resident or nonresident tuition was charged, as well as the location of the school attended by any of the person’s children who are in grades K-12;
The representations made to any insurance company concerning the person’s residence and on which any insurance policies are issued;
The location where the person, the person’s spouse, or the person’s minor children regularly participate in church, sporting events, group activities, or public performances;
Certificate of domicile or homestead, if applicable (a homestead exemption should not be filed on the property while owned);
Utility bills at a residence;
Professional or occupational license; and
Wage statements or other proof of employment in the state.
The following factors are generally not considered factors to be included in the factual analysis of “residency”:
The location of any organization to which the person makes charitable contributions; and
The location of any charitable organization for which the person serves as a board member, committee member, or other volunteer.
This is not a decision to be based on input from the"E-Attorneys" or the like. Other considerations include:
Health insurance
Property taxes
In-State versus out of state tuition
Licensing issues (professional, if any)
Estate and inheritance taxes
etc.
I'll go to bed now.......and look up the NJ rent issue....LOL
* This post was
last
edited 04/14/08 01:23pm by threedogtrip *
View edit history
Reality is that which, when you stop believing in it, doesn't go away.
--- Philip K. Dick
1999 Gulfstream Sunvoyager (Our Gulfstream Home Site)
2006 Jeep Wranger
Doberlady
German Shedder Dog
Rescued Gentleman (In Spirit)
Offline
