Clients frequently decide that they would like to move to the State of Florida and become Florida residents. The reason for this is usually financial, as Florida does not have an income tax, nor do they have an estate tax. Unfortunately, the move is often made without careful thought of the consequences of such a move. If one simply wants to spend a good deal of time in Florida, there is certainly nothing wrong with that. Becoming a Florida resident, however, is more involved.
First, anyone contemplating becoming a resident of Florida should make sure that their health insurance and long-term health care insurance policies will continue to cover them in the way they are used to. Additionally, if a New Yorker owns a home in New York that he/she plans to sell, the capital gains tax consequences of changing residency can be quite adverse, unless the home is sold within a relatively short time after one gives up their New York residency. Keep in mind that everyone has a $250,000 capital gains tax exclusion on the sale of their primary residence. It is important to avoid losing this exclusion, as the tax can be quite substantial.
New York State, aware that many New Yorkers become Florida residents to save income taxes, will often audit the tax returns of those who change residency. Extra care must be taken to avoid the impression that one is truly a New Yorker. Therefore, drivers licenses, voter registration, car registrations, and the like must be changed to the State of Florida. Moreover, one should attempt to sever all ties to New York, to extent possible. Owning a business in New York, owning a residence here, having assets here, all give the impression to the taxing authorities that one is still a New York resident, notwithstanding any elections to the contrary.
Lastly, when planning a move to Florida, one should seriously consider consulting with an attorney licensed to practice in both New York and Florida, one who is knowledgeable about the laws in both jurisdictions. Many aspects of estate planning are different in Florida, and, therefore, some estate planning changes may be warranted.