Florida second home: rent, buy, or skip altogether?

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Wannaretireearly
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Florida second home: rent, buy, or skip altogether?

Post by Wannaretireearly »

Folks,

IMO, if i'm going to setup a second residence in Florida, it probably should happen while i'm working. Easier to get a mortgage etc.
Perhaps I'm wrong out of the gate, and others have successfully established FL residence in retirement and can chime in.

Main 'For' reasons:
A. We like Florida & especially the Fort Lauderdale area. Friends have recently moved and love it there, so far.
B. Tax reasons. We are in CA. If we do make this big move, I'd want to establish FL residency for tax reasons (No FL State income tax).

Main 'Against' reasons:
A. Far away from our primary CA residence.
B. Costly to maintain a property? Perhaps this is why we'd prefer to buy a condo. Or just rent? If we rent, can we still get the tax benefits?

Anyway, this isn't a move we need to make in the short term, but in my mind, medium term would make sense if we are going to do this at all (next few years).

I wonder if other West coasters are thinking along the same lines, or have even executed a plan like this? Would love to hear how this worked for you!
:sharebeer
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
sailaway
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Re: Florida second home: rent, buy, or skip altogether?

Post by sailaway »

Everyone I know who tried this from CA gave up one or the other pretty quickly. Which they gave up is currently a pretty even split.

Only the Zonies keep coming back.

It does seem pretty short sighted to me to increase your lifestyle expenses significantly with the excuse of avoiding taxes. Is that a knee jerk react or have you actually done the math?
chipperd
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Re: Florida second home: rent, buy, or skip altogether?

Post by chipperd »

Northeasterner chiming in.

Given the weather and sea level rise, if we ever pull the trigger and move to Florida, we will be renters after selling our primary home in the N.E.
I believe you need to live physically in Florida for at least 183 days/year to start, plus some other requirements.

https://www.kiplinger.com/article/taxes ... taxes.html

I have no idea what the Cali rules are on that issue, but you will need to meet those requirements to "opt out" of being a resident if you maintain property in Cali.
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adamthesmythe
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Re: Florida second home: rent, buy, or skip altogether?

Post by adamthesmythe »

For several years before I retired I lived in the northeast and owned a second house in the Southwest.

Not necessarily the best economic choice although there were certain advantages when I finally moved. (I knew exactly where I was moving to, no need to "rent first" or coordinate closings, knew what stuff to move and what to discard).

There were no tax implications for me. If are thinking about changing official residency- I hear it is difficult to persuade California, and will be especially difficult if you rent.

As far as actually LIVING in Florida is concerned- all I can say is- I hear there are some people who like it, although I don't know why.
jebmke
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Re: Florida second home: rent, buy, or skip altogether?

Post by jebmke »

if you have never actually lived in Florida for an extended period, I would definitely rent.
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Sandtrap
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Re: Florida second home: rent, buy, or skip altogether?

Post by Sandtrap »

Wannaretireearly wrote: Tue Sep 21, 2021 10:27 am Folks,

IMO, if i'm going to setup a second residence in Florida, it probably should happen while i'm working. Easier to get a mortgage etc.
Perhaps I'm wrong out of the gate, and others have successfully established FL residence in retirement and can chime in.

Main 'For' reasons:
A. We like Florida & especially the Fort Lauderdale area. Friends have recently moved and love it there, so far.
B. Tax reasons. We are in CA. If we do make this big move, I'd want to establish FL residency for tax reasons (No FL State income tax).

Main 'Against' reasons:
A. Far away from our primary CA residence.
B. Costly to maintain a property? Perhaps this is why we'd prefer to buy a condo. Or just rent? If we rent, can we still get the tax benefits?

Anyway, this isn't a move we need to make in the short term, but in my mind, medium term would make sense if we are going to do this at all (next few years).

I wonder if other West coasters are thinking along the same lines, or have even executed a plan like this? Would love to hear how this worked for you!
:sharebeer
VRBO/Air BnB as needed.

Short term rental as needed.

Anything more is a money pit given your data presented (not in general for others).

Unless your assets and income stream is so high that owning multiple homes in various areas is financially inconsequential.

Also, try AirBnB or VRBO or short term rental to see if you like it before going further.
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jebmke
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Re: Florida second home: rent, buy, or skip altogether?

Post by jebmke »

Sandtrap wrote: Tue Sep 21, 2021 10:49 am VRBO/Air BnB as needed.

Short term rental as needed.
I wonder how CA would view that; hard to make the case that your primary residence is in FL if you bounce around short-term stuff.
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Topic Author
Wannaretireearly
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Re: Florida second home: rent, buy, or skip altogether?

Post by Wannaretireearly »

sailaway wrote: Tue Sep 21, 2021 10:40 am Everyone I know who tried this from CA gave up one or the other pretty quickly. Which they gave up is currently a pretty even split.

Only the Zonies keep coming back.

It does seem pretty short sighted to me to increase your lifestyle expenses significantly with the excuse of avoiding taxes. Is that a knee jerk react or have you actually done the math?
I've not done the math. Back of the envelope math: 5 to 10k additional CA tax compared to FL? ( assume 100 to 130k income need in retirement). I dunno, and agree it may not make sense just for taxes.
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Re: Florida second home: rent, buy, or skip altogether?

Post by Sandtrap »

jebmke wrote: Tue Sep 21, 2021 10:51 am
Sandtrap wrote: Tue Sep 21, 2021 10:49 am VRBO/Air BnB as needed.

Short term rental as needed.
I wonder how CA would view that; hard to make the case that your primary residence is in FL if you bounce around short-term stuff.
True.
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chw
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Re: Florida second home: rent, buy, or skip altogether?

Post by chw »

Personally, I would be cautious about buying in a coastal town with sea level rise possibly becoming a harsher reality than expected in the next 1-2 decades. If you are dead set on purchasing, avoid flood zones, and pay attention to surge maps. Some communities provide them to show expected tidal surge areas during a hurricane. Not being in a flood zone does not mean a mild tidal surge from a hurricane won’t reach you.
Last edited by chw on Tue Sep 21, 2021 11:55 am, edited 1 time in total.
PoppyA
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Re: Florida second home: rent, buy, or skip altogether?

Post by PoppyA »

Why not work to change taxes where you are?
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Re: Florida second home: rent, buy, or skip altogether?

Post by FoundingFather »

My family and extended family have owned 5 different condos is Florida, all in the Bradenton area on the West coast of Florida. They were a fun place to visit, but most have been sold after 5-10 years for various reasons. All of my family and extended family has made some very good profit on these transactions, so no regrets.

In general, they were profitable, despite the HOAs, due to the wild fluctuation in real estate prices that occur in vacation/2nd home areas based on the larger economy. For example, after the 2008 crisis, my parents bought a retirement condo in Bradenton, which they sold 2 years later at double the purchase price. They are repeating this again right now, and will likely make 50% profit on this transaction (i.e. now does not seem like a great time to buy).

For me, second homes are a money sink (HOAs, taxes, maintenance from afar, etc) and cause a loss of vacation freedom (i.e. you feel obligated to visit the vacation condo rather than where you actually want to go) unless you buy them during a sharp market downturn, which can allow for profits enough to offset these negatives.

If I was in your situation, I would do some long term vacation rentals to get a feel for the areas of interest, as others have suggested, then wait for an economic downturn and look for a bargain. If you find a bargain, it will at least prevent trying the idea of a second home in Florida from being a financial mistake.

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IMO
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Re: Florida second home: rent, buy, or skip altogether?

Post by IMO »

Wannaretireearly wrote: Tue Sep 21, 2021 10:27 am Folks,

IMO, if i'm going to setup a second residence in Florida, it probably should happen while i'm working. Easier to get a mortgage etc.
Perhaps I'm wrong out of the gate, and others have successfully established FL residence in retirement and can chime in.

Main 'For' reasons:
A. We like Florida & especially the Fort Lauderdale area. Friends have recently moved and love it there, so far.
B. Tax reasons. We are in CA. If we do make this big move, I'd want to establish FL residency for tax reasons (No FL State income tax).

Main 'Against' reasons:
A. Far away from our primary CA residence.
B. Costly to maintain a property? Perhaps this is why we'd prefer to buy a condo. Or just rent? If we rent, can we still get the tax benefits?

Anyway, this isn't a move we need to make in the short term, but in my mind, medium term would make sense if we are going to do this at all (next few years).

I wonder if other West coasters are thinking along the same lines, or have even executed a plan like this? Would love to hear how this worked for you!
:sharebeer
You currently live/own a home in CA, and as such, it will likely hold it's value and/or appreciate at least to the level of homes in Florida. Thus, if/when you really do choose to make a complete relocation to Florida, if real estate price increases in Florida, it really won't matter because your CA home will have tracked that increase when you sell it. No need to rush into anything, buy 6 months before you actually stop working (while you have income for the mortgage application).

You have confusing information in your post. Are you trying to "establish" FL residency NOW during your working years to attempt to not pay CA state income tax rates, or are you looking at establishing FL residency once you get to actual retirement? There are problems to changing your residence to FL, if you own/rent in FL now. When your retired and physically move/relocate to FL full time, then it won't matter if you rent/own concerning state income taxes (or the lack thereof).

Have you really drilled down on the math for retirement? Many people pay little in taxes in CA when they actually retire, and they are afforded stable property tax rates via Prop 13. You need to look at property tax rates and rates of homeowner's insurance for living/owning a place in Florida. I suspect the apparent advantages aren't as great as you might be thinking in retirement. Otherwise, it's not like there is going to be any significant differences on the cost of living between the 2 areas when it comes to the day to day things in life. I do always wonder how much it costs a FL coastal resident when they have to evacuate when hurricanes are approaching (hotels on the evacuation areas must price gouge people?).

Are you able to spend extended time in Florida while your still working in CA? The costs simply to get back/forth from CA to Fl for a couple probably runs about $1000 just in flight costs, let alone figuring out if you going to rent a car vs. keep another car in FL. There are costs to maintaining a 2nd home, just be sure you have a good grip on the numbers. Your insurance may even require you to visit the home a number of times per year.

Barring the more recent housing craze, the concept of spending as much time in an area (via long term renting/many VRBO's, etc) during different times of the year is good advice. California is seen as one of the geographic locations with overall prime year round weather. Make sure your truly comfortable leaving that to save a couple thousand per year.

My advice is from someone who moved from CA long ago for career reasons, but I still have family/friends in CA that I visit. I used to recommend they get out of CA for a variety of reasons, but as I've gotten older I see more of the benefits of them staying put in retirement. I do try to help point out the realities for them like living in extreme heat in some places and dealing with even "mild" cold in other places. The grass isn't always greener. It can be, but there are trade offs in everything.
Topic Author
Wannaretireearly
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Re: Florida second home: rent, buy, or skip altogether?

Post by Wannaretireearly »

IMO wrote: Tue Sep 21, 2021 12:59 pm
Wannaretireearly wrote: Tue Sep 21, 2021 10:27 am Folks,

IMO, if i'm going to setup a second residence in Florida, it probably should happen while i'm working. Easier to get a mortgage etc.
Perhaps I'm wrong out of the gate, and others have successfully established FL residence in retirement and can chime in.

Main 'For' reasons:
A. We like Florida & especially the Fort Lauderdale area. Friends have recently moved and love it there, so far.
B. Tax reasons. We are in CA. If we do make this big move, I'd want to establish FL residency for tax reasons (No FL State income tax).

Main 'Against' reasons:
A. Far away from our primary CA residence.
B. Costly to maintain a property? Perhaps this is why we'd prefer to buy a condo. Or just rent? If we rent, can we still get the tax benefits?

Anyway, this isn't a move we need to make in the short term, but in my mind, medium term would make sense if we are going to do this at all (next few years).

I wonder if other West coasters are thinking along the same lines, or have even executed a plan like this? Would love to hear how this worked for you!
:sharebeer
You currently live/own a home in CA, and as such, it will likely hold it's value and/or appreciate at least to the level of homes in Florida. Thus, if/when you really do choose to make a complete relocation to Florida, if real estate price increases in Florida, it really won't matter because your CA home will have tracked that increase when you sell it. No need to rush into anything, buy 6 months before you actually stop working (while you have income for the mortgage application).

You have confusing information in your post. Are you trying to "establish" FL residency NOW during your working years to attempt to not pay CA state income tax rates, or are you looking at establishing FL residency once you get to actual retirement? There are problems to changing your residence to FL, if you own/rent in FL now. When your retired and physically move/relocate to FL full time, then it won't matter if you rent/own concerning state income taxes (or the lack thereof).

Have you really drilled down on the math for retirement? Many people pay little in taxes in CA when they actually retire, and they are afforded stable property tax rates via Prop 13. You need to look at property tax rates and rates of homeowner's insurance for living/owning a place in Florida. I suspect the apparent advantages aren't as great as you might be thinking in retirement. Otherwise, it's not like there is going to be any significant differences on the cost of living between the 2 areas when it comes to the day to day things in life. I do always wonder how much it costs a FL coastal resident when they have to evacuate when hurricanes are approaching (hotels on the evacuation areas must price gouge people?).

Are you able to spend extended time in Florida while your still working in CA? The costs simply to get back/forth from CA to Fl for a couple probably runs about $1000 just in flight costs, let alone figuring out if you going to rent a car vs. keep another car in FL. There are costs to maintaining a 2nd home, just be sure you have a good grip on the numbers. Your insurance may even require you to visit the home a number of times per year.

Barring the more recent housing craze, the concept of spending as much time in an area (via long term renting/many VRBO's, etc) during different times of the year is good advice. California is seen as one of the geographic locations with overall prime year round weather. Make sure your truly comfortable leaving that to save a couple thousand per year.

My advice is from someone who moved from CA long ago for career reasons, but I still have family/friends in CA that I visit. I used to recommend they get out of CA for a variety of reasons, but as I've gotten older I see more of the benefits of them staying put in retirement. I do try to help point out the realities for them like living in extreme heat in some places and dealing with even "mild" cold in other places. The grass isn't always greener. It can be, but there are trade offs in everything.
Thanks for your detailed post. Apologies for any confusion. I'm not currently making any change. All this would potentially be a few years out. Also, I do not plan on ever selling my CA property (which would make establishing FL residency even more complex..).

Great shared experiences in the posts above. Many thanks! I like the idea of longer term rentals/vrbo/airbnb when the time comes. Plus, looking out for bargains only during a downturn. Seems retiring soley in CA should not concern to me financially. I'll look into some of the retirement calculators when I get a chance!
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
IMO
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Re: Florida second home: rent, buy, or skip altogether?

Post by IMO »

Wannaretireearly wrote: Tue Sep 21, 2021 1:19 pm
IMO wrote: Tue Sep 21, 2021 12:59 pm
Wannaretireearly wrote: Tue Sep 21, 2021 10:27 am Folks,

IMO, if i'm going to setup a second residence in Florida, it probably should happen while i'm working. Easier to get a mortgage etc.
Perhaps I'm wrong out of the gate, and others have successfully established FL residence in retirement and can chime in.

Main 'For' reasons:
A. We like Florida & especially the Fort Lauderdale area. Friends have recently moved and love it there, so far.
B. Tax reasons. We are in CA. If we do make this big move, I'd want to establish FL residency for tax reasons (No FL State income tax).

Main 'Against' reasons:
A. Far away from our primary CA residence.
B. Costly to maintain a property? Perhaps this is why we'd prefer to buy a condo. Or just rent? If we rent, can we still get the tax benefits?

Anyway, this isn't a move we need to make in the short term, but in my mind, medium term would make sense if we are going to do this at all (next few years).

I wonder if other West coasters are thinking along the same lines, or have even executed a plan like this? Would love to hear how this worked for you!
:sharebeer
You currently live/own a home in CA, and as such, it will likely hold it's value and/or appreciate at least to the level of homes in Florida. Thus, if/when you really do choose to make a complete relocation to Florida, if real estate price increases in Florida, it really won't matter because your CA home will have tracked that increase when you sell it. No need to rush into anything, buy 6 months before you actually stop working (while you have income for the mortgage application).

You have confusing information in your post. Are you trying to "establish" FL residency NOW during your working years to attempt to not pay CA state income tax rates, or are you looking at establishing FL residency once you get to actual retirement? There are problems to changing your residence to FL, if you own/rent in FL now. When your retired and physically move/relocate to FL full time, then it won't matter if you rent/own concerning state income taxes (or the lack thereof).

Have you really drilled down on the math for retirement? Many people pay little in taxes in CA when they actually retire, and they are afforded stable property tax rates via Prop 13. You need to look at property tax rates and rates of homeowner's insurance for living/owning a place in Florida. I suspect the apparent advantages aren't as great as you might be thinking in retirement. Otherwise, it's not like there is going to be any significant differences on the cost of living between the 2 areas when it comes to the day to day things in life. I do always wonder how much it costs a FL coastal resident when they have to evacuate when hurricanes are approaching (hotels on the evacuation areas must price gouge people?).

Are you able to spend extended time in Florida while your still working in CA? The costs simply to get back/forth from CA to Fl for a couple probably runs about $1000 just in flight costs, let alone figuring out if you going to rent a car vs. keep another car in FL. There are costs to maintaining a 2nd home, just be sure you have a good grip on the numbers. Your insurance may even require you to visit the home a number of times per year.

Barring the more recent housing craze, the concept of spending as much time in an area (via long term renting/many VRBO's, etc) during different times of the year is good advice. California is seen as one of the geographic locations with overall prime year round weather. Make sure your truly comfortable leaving that to save a couple thousand per year.

My advice is from someone who moved from CA long ago for career reasons, but I still have family/friends in CA that I visit. I used to recommend they get out of CA for a variety of reasons, but as I've gotten older I see more of the benefits of them staying put in retirement. I do try to help point out the realities for them like living in extreme heat in some places and dealing with even "mild" cold in other places. The grass isn't always greener. It can be, but there are trade offs in everything.
Thanks for your detailed post. Apologies for any confusion. I'm not currently making any change. All this would potentially be a few years out. Also, I do not plan on ever selling my CA property (which would make establishing FL residency even more complex..).

Great shared experiences in the posts above. Many thanks! I like the idea of longer term rentals/vrbo/airbnb when the time comes. Plus, looking out for bargains only during a downturn. Seems retiring soley in CA should not concern to me financially. I'll look into some of the retirement calculators when I get a chance!
So it seems that your post is more in lines of:

Considering owning 2 homes in retirement, 1 in CA and 1 in FL. Would changing my primary residence from CA to FL save enough in retirement income taxes (CA income taxes) to help significantly justify getting the home in FL with all it's costs?

Then a 2nd post:

How to truly change my state of residence when I retire from CA to FL when I move into my 2nd home in FL, but keep my old primary home (and now switching it as my 2nd home) in CA. Things to consider/look out for and satisfy the long arm of the CA tax man?

I think there's probably people who've had this issue that have places in Northeast and also a place in FL.

-----------

I do think the concept is doable and would be nice to have the 2 locales to live. I'm not opposed to 2nd homes as I have one, but there are logistics to that and I believe there have been posts about the topic. Most on this site though are opposed to 2nd homes for a variety of reasons.
RetiredAL
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Re: Florida second home: rent, buy, or skip altogether?

Post by RetiredAL »

Wannaretireearly wrote: Tue Sep 21, 2021 10:27 am
Main 'For' reasons:

B. Tax reasons. We are in CA. If we do make this big move, I'd want to establish FL residency for tax reasons (No FL State income tax).
Do be aware that CA does not include SS as taxable income. Our Fed AGI last year was $87K. Without SS, our CA AGI was $57K. Our CA tax "Total Tax" was $222.

On top of that, CA just deposited $600 "CA Stimulus" into our checking account yesterday. When I first read about this, I thought dang, I'm just over the $85K cut-off, forgetting at first read that our CA AGI would be way below the cut-off.
Topic Author
Wannaretireearly
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Re: Florida second home: rent, buy, or skip altogether?

Post by Wannaretireearly »

RetiredAL wrote: Tue Sep 21, 2021 3:15 pm
Wannaretireearly wrote: Tue Sep 21, 2021 10:27 am
Main 'For' reasons:

B. Tax reasons. We are in CA. If we do make this big move, I'd want to establish FL residency for tax reasons (No FL State income tax).
Do be aware that CA does not include SS as taxable income. Our Fed AGI last year was $87K. Without SS, our CA AGI was $57K. Our CA tax "Total Tax" was $222.

On top of that, CA just deposited $600 "CA Stimulus" into our checking account yesterday. When I first read about this, I thought dang, I'm just over the $85K cut-off, forgetting at first read that our CA AGI would be way below the cut-off.
This is a great point. Thanks for posting your actual details. Very eye opening. Go Cali!! (For retirees ;))
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
Chumash29
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Re: Florida second home: rent, buy, or skip altogether?

Post by Chumash29 »

Greetings,

I exited California at the beginning of 2020 (just before the pandemic) and bought a home in Florida as well as New England. My wife is from Florida, and we had been bicoastal for 5 years as we tested Florida (which is a massive difference than CA). Between [political comment removed by Moderator Misenplace], lack of value from a quality of life standpoint, and the back and forth travel (on top of my usual business travel) we pulled the trigger and made the move. Business wise, FL is a much better business state, and the cost benefit analysis we ran gave FL a higher return versus CA (with a few trade offs as well, one being weather!). Nowhere is perfect!

A few things to consider:

1. Depending on what you enjoy, FL can be amazing or it can be a challenge. Coming from an outdoor and active lifestyle 12 months out of the year to a very hot and humid climate has been hard, thus the purchase of a NE home to shift for summer through fall. If you’re an inside person, you’ll probably appreciate the lower energy costs and enjoy the AC 24/7. Depending where in Florida could mean water access, which is a fun (yet costly) plus. Just depends on what you want. Winters are amazing, and December through March is special. We love the easy access to the East coast, especially New England, so it’s a fun change of pace (one we hope to enjoy more once Covid becomes more manageable).

2. If your primary focus is reducing income tax exposure, then maintaining your residence in CA will be a problem. I’m not a tax attorney, nor a CPA, but my accountant has been helping folks exit CA for years. Your big risk is being flagged for an audit - if you’ve never had one, good for you, and avoid it all costs. Depending what your tax rate is will also dictate how closely CA will follow / track your movements. If you’re a high earner, which is safe to assume since you’re considering owning two homes, then you must realize that you’re an important revenue stream to the state. These days, it’s incredibly easy for the state to track you through your cell phone and tower pings (and IP address - should you not use a VPN). If you mismanage, or miscount your days in / out of CA, and claim FL residency, you’re basically guaranteed a date with the IRS and CA. If you make CA home 50% of the time, then CA could lay claim on 50% of your income, and even make a grab on all of it. I have a friend who went through this, and it was a messy battle, which he ultimately lost and had to pay CA his full state income tax, on top of buying a house in a zero state income state. Best advice I received was completely separate from CA to remove any ambiguity and eliminate the chance of an audit. Any hard ties such as clubs, schools, homes, places of worship, etc. only lock you in and strengthen the state’s case against you.

3. Jobs / work. Florida is not California, and is not as robust of a job market due to limited industry options. Yes, Florida is growing, but it is not the 7th largest economy in the world (depending on which numbers you look at). If you’re remote, then this may not apply to you, as you can work from anywhere.

There’s more to touch on, and I hope this gives you some things to consider. Wish you the best as you evaluate the options for you and your family.

Chumash29
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Re: Florida second home: rent, buy, or skip altogether?

Post by friar1610 »

Wannaretireearly wrote: Tue Sep 21, 2021 3:34 pm
RetiredAL wrote: Tue Sep 21, 2021 3:15 pm
Wannaretireearly wrote: Tue Sep 21, 2021 10:27 am
Main 'For' reasons:

B. Tax reasons. We are in CA. If we do make this big move, I'd want to establish FL residency for tax reasons (No FL State income tax).
Do be aware that CA does not include SS as taxable income. Our Fed AGI last year was $87K. Without SS, our CA AGI was $57K. Our CA tax "Total Tax" was $222.

On top of that, CA just deposited $600 "CA Stimulus" into our checking account yesterday. When I first read about this, I thought dang, I'm just over the $85K cut-off, forgetting at first read that our CA AGI would be way below the cut-off.
This is a great point. Thanks for posting your actual details. Very eye opening. Go Cali!! (For retirees ;))
I’m in an email group with some retired Navy buddies, several of whom live in the San Diego area. They are always complaining about CA income taxes and CA politics. But when I ask them why they remain there if things are so bad I never get a substantive answer. So I conclude that their living situations, the SoCal climate and CA’s other positives far outweigh the negatives they grouse about.
Friar1610 | 50-ish/50-ish - a satisficer, not a maximizer
RetiredAL
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Re: Florida second home: rent, buy, or skip altogether?

Post by RetiredAL »

Wannaretireearly wrote: Tue Sep 21, 2021 3:34 pm
RetiredAL wrote: Tue Sep 21, 2021 3:15 pm
Wannaretireearly wrote: Tue Sep 21, 2021 10:27 am
Main 'For' reasons:

B. Tax reasons. We are in CA. If we do make this big move, I'd want to establish FL residency for tax reasons (No FL State income tax).
Do be aware that CA does not include SS as taxable income. Our Fed AGI last year was $87K. Without SS, our CA AGI was $57K. Our CA tax "Total Tax" was $222.

On top of that, CA just deposited $600 "CA Stimulus" into our checking account yesterday. When I first read about this, I thought dang, I'm just over the $85K cut-off, forgetting at first read that our CA AGI would be way below the cut-off.
This is a great point. Thanks for posting your actual details. Very eye opening. Go Cali!! (For retirees ;))
CA is not an expensive state for long time residents now fully retired.

Our property taxes on my now $1.5M home are $3k. Standard home, UHCOL area. If sold, we'd have to pay CA $100K+ in income tax. Only $ salvation will be to the last person standing.

In addition to our SS, our spending needs are met with <2% withdrawals. No pension, I took it as a lump sum.

Before retirement 5 years ago, our income tax bills totaled to around $14-15K/yr. If I had done no conversions in 2020, my tax bills total would have been <$2000 Fed with zero State.
Last edited by RetiredAL on Tue Sep 21, 2021 4:52 pm, edited 1 time in total.
theplayer11
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Re: Florida second home: rent, buy, or skip altogether?

Post by theplayer11 »

adamthesmythe wrote: Tue Sep 21, 2021 10:48 am For several years before I retired I lived in the northeast and owned a second house in the Southwest.

Not necessarily the best economic choice although there were certain advantages when I finally moved. (I knew exactly where I was moving to, no need to "rent first" or coordinate closings, knew what stuff to move and what to discard).

There were no tax implications for me. If are thinking about changing official residency- I hear it is difficult to persuade California, and will be especially difficult if you rent.

As far as actually LIVING in Florida is concerned- all I can say is- I hear there are some people who like it, although I don't know why.
flatlanders....I need some mountains and 4 distinct seasons
RetiredAL
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Re: Florida second home: rent, buy, or skip altogether?

Post by RetiredAL »

theplayer11 wrote: Tue Sep 21, 2021 4:41 pm
adamthesmythe wrote: Tue Sep 21, 2021 10:48 am For several years before I retired I lived in the northeast and owned a second house in the Southwest.

Not necessarily the best economic choice although there were certain advantages when I finally moved. (I knew exactly where I was moving to, no need to "rent first" or coordinate closings, knew what stuff to move and what to discard).

There were no tax implications for me. If are thinking about changing official residency- I hear it is difficult to persuade California, and will be especially difficult if you rent.

As far as actually LIVING in Florida is concerned- all I can say is- I hear there are some people who like it, although I don't know why.
flatlanders....I need some mountains and 4 distinct seasons
For us CA flatlanders, we visit the snow, we don't live in it!
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Wricha
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Re: Florida second home: rent, buy, or skip altogether?

Post by Wricha »

PoppyA wrote: Tue Sep 21, 2021 11:34 am Why not work to change taxes where you are?
Good one. Are you taking wagers on that?
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Wannaretireearly
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Re: Florida second home: rent, buy, or skip altogether?

Post by Wannaretireearly »

Chumash29 wrote: Tue Sep 21, 2021 3:53 pm Greetings,

I exited California at the beginning of 2020 (just before the pandemic) and bought a home in Florida as well as New England. My wife is from Florida, and we had been bicoastal for 5 years as we tested Florida (which is a massive difference than CA). Between [political comment removed by Moderator Misenplace], lack of value from a quality of life standpoint, and the back and forth travel (on top of my usual business travel) we pulled the trigger and made the move. Business wise, FL is a much better business state, and the cost benefit analysis we ran gave FL a higher return versus CA (with a few trade offs as well, one being weather!). Nowhere is perfect!

A few things to consider:

1. Depending on what you enjoy, FL can be amazing or it can be a challenge. Coming from an outdoor and active lifestyle 12 months out of the year to a very hot and humid climate has been hard, thus the purchase of a NE home to shift for summer through fall. If you’re an inside person, you’ll probably appreciate the lower energy costs and enjoy the AC 24/7. Depending where in Florida could mean water access, which is a fun (yet costly) plus. Just depends on what you want. Winters are amazing, and December through March is special. We love the easy access to the East coast, especially New England, so it’s a fun change of pace (one we hope to enjoy more once Covid becomes more manageable).

2. If your primary focus is reducing income tax exposure, then maintaining your residence in CA will be a problem. I’m not a tax attorney, nor a CPA, but my accountant has been helping folks exit CA for years. Your big risk is being flagged for an audit - if you’ve never had one, good for you, and avoid it all costs. Depending what your tax rate is will also dictate how closely CA will follow / track your movements. If you’re a high earner, which is safe to assume since you’re considering owning two homes, then you must realize that you’re an important revenue stream to the state. These days, it’s incredibly easy for the state to track you through your cell phone and tower pings (and IP address - should you not use a VPN). If you mismanage, or miscount your days in / out of CA, and claim FL residency, you’re basically guaranteed a date with the IRS and CA. If you make CA home 50% of the time, then CA could lay claim on 50% of your income, and even make a grab on all of it. I have a friend who went through this, and it was a messy battle, which he ultimately lost and had to pay CA his full state income tax, on top of buying a house in a zero state income state. Best advice I received was completely separate from CA to remove any ambiguity and eliminate the chance of an audit. Any hard ties such as clubs, schools, homes, places of worship, etc. only lock you in and strengthen the state’s case against you.

3. Jobs / work. Florida is not California, and is not as robust of a job market due to limited industry options. Yes, Florida is growing, but it is not the 7th largest economy in the world (depending on which numbers you look at). If you’re remote, then this may not apply to you, as you can work from anywhere.

There’s more to touch on, and I hope this gives you some things to consider. Wish you the best as you evaluate the options for you and your family.

Chumash29
Great write up. Thanks for sharing, especially the tax notes. Enjoy your new FL and NE locations!
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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