state tax for capital gain

Discussion in 'Taxes and Accounting' started by yip1997, Mar 6, 2008.

  1. Can I buy a second home in Nevada (or any state w/o state tax) and declare it as my primary residence in 1040 even though I don't actually live there? Any rules for primary residence?
  2. So... what you want to do is buy an INVESTMENT property and claim the tax benefits which go with a primary residence... that about it?
  3. Yes. If the saving in state income tax is more than the annual expense of the property, it makes sense to buy the property in a state without state income tax, right?
  4. If audited, you'd have to prove residency for >180 days of the year.

    Obviously switching over your drivers license and any car registrations is your best bet.
  5. You have to read the tax laws for each state as each state defines who is a resident or non resident for tax purposes.

    If you buy a house in a zero income tax state (Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming) and claim residence, but don't actually live there, your actual state of residence can nail you with taxes and penalties.
  6. I have a friend that lives in Cal, but owns nothing here. no checking acct even. He has drivers license, checking, auto, health insurance, everything in S Dakota. He uses a mail forwarding service that has a street address, so even his tax forms have that address.

    He does pay rent here, but odds of Cal finding out he lives here are pretty damn low. Only disadvantage is he can't buy a house, but he doesn't want one anyway. His cable company knows he is here. I don't think the State audits cable bills too often though.
  7. He can buy a house in Cal as a second home. It is allowed to have a house in non-resident state.

    Say I have a house in LA, and I can buy a second house in Nevada claiming Nevada as the primary residence. I can claim Nevada as my primary residence even though I spend most of my time in LA, right?

    Does the law state that you have to stay in the primary residence for over 180 days?
  8. No.

    If you spend most of your time out of Nevada, in another house, then that is your primary residence.

    As for my buddy in Cal, he cannot buy a home here because Cal would then know he was here, and may audit him about his legal residence. As it is now, he is invisible to California.