You may have considered relocating to a new state for retirement, with lower taxes being one of the main reasons behind your move. However, you’ll have to research on the tax structure the state implements, and its impact on your overall tax burden. Don’t let these expenses muddle your decision, though – you’ll also have to actually like the area you’re moving to before you commit to anything.
While there are seniors who uproot themselves entirely and plan to live out their retirements somewhere new, some plan to keep their original residence, and set up a new home in another area. Many retirees who do this also plan towards tax advantages, which they can get by following certain rules. For example, if you want to spend a portion of the entire year in your old home for whatever reason, and the rest of the year elsewhere where the weather’s more to your liking, you’ll need to claim residence where the tax burden is lowest to save money.
However, you will have to qualify for residency (and get the associated perks) by spending a minimum of 183 days there every year, and spend less than that number in the area where you don’t want to be listed as a residence. Aside from spending the required number of days per year in a state, you also have to vote, register your vehicles, get your mail, and visit the doctor there.
You can still get financial breaks in retirement without uprooting yourself entirely. You can do this by keeping your old place and getting a new home where these expenses are low – just remember that there are some rules you need to abide by to get lower taxes, such as establishing residency. After you’ve decided to move to a new area, or buy another home, talk to your financial planner to know if the tax structure of the state fits your financial situation.
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