Using rental property to change state of residency

[Adam Moessinger]

Hi all,

I'm currently working abroad and have been for the past 20 years or so. I own rental properties in the US, but my primary residence for tax purposes remains my parents home in MD. I'm looking to buy a property in Texas and rent it out. However, I'd also like to make it my primary residence for tax purposes. Does anyone have experience doing this or have any advice on how/if it might be possible. Certainly people rent their primary residences when they live abroad, but perhaps I'd actually have to reside there first?

Thanks!!!

[Eamonn McElroy]

State residency questions are a matter of facts, circumstances, and intent.

With proper planning, and bona fide action and intent, an expat can change their state of residency.

However, if all of your friends and family reside in MD, that's where you primarily visit when you come back to the states, you maintain a MD driver's license, and/or are registered to vote in MD, a (current) argument that you're not a MD resident for MD income tax purposes would fall flat based on face value.

You'll want to work with your tax advisor to explore this issue as (1) there is nuance, and (2) every state's rules are slightly different.  As you've been an expat for 20 years, I imagine you may already have one that helps you navigate US filing obligations unique to expats.

[Basit Siddiqi]

@Adam Moessinger

What is your intent for doing so?

Are you considered an MD resident for state income tax purposes? Are you paying state taxes to MD for your earnings earned abroad?

[Adam Moessinger]

@Basit Siddiqi-  My reason for wanting to change my residency if for tax purposes. I currently pay MD taxes but haven't lived there since 2003. My driver's license is there and that's where I'm registered to vote. However, my physical link to MD is that that is where my parents live. So, I'd like to buy property (and rent it out) in Texas and move my residency there. Does that make sense?

[Adam Moessinger]

@Eamonn 

@Eamonn McElroy- Thanks for the reply. You're totally right that I have zero claim to any other residency besides MD at this point. So, I'd like to buy a property in Texas. I could then ostensibly get a driver's license there and register to vote. My issue is that although I would own a property there, I wouldn't be living there physically because I'm stationed abroad. So the logistics of that are what I'm interested in figuring out. Thanks!