Thinking of selling the house, pulling up anchor, and sailing the globe this summer? Got a new job and relocating to a new state after you take that three-month tour throughout Europe that you’ve been planning since college? Taking advantage of the summer to move the kids to a new school system in the next state over? Don’t forget to consider the potential state income tax implications!
Even if you sell your home and leave the state, it’s important to note that many states have stringent regulations with regards to the perpetuation of residency. That being said, the sale of your home does not automatically change your residency status, even if you have every intention of moving out of state. Therefore, even after the sale of your home, you may still be a resident for state income tax purposes in the eyes of the jurisdiction that you plan on leaving.
An important key for many state residency issues may be the often overlooked “leave and land” concept. The act of uprooting oneself from one state is not enough to satisfy some state’s stringent regulations; the “leave and land” concept shows that a bona fide replacement domicile in another state or country is required for an individual to no longer be considered a resident of the former state, and therefore no longer subject to that state’s individual income tax. That being said, unless you plan on paying income tax to your former state, be sure to stick that landing!