[johncat]

Dear community--

I moved my family to NY State about 3 years ago from Virginia. I work in commercial real estate but am fairly new to business (about 7 years experience in RE). I own a house in NY and am starting to see the light at the end of the tunnel in terms of doing more and better deals, paying down the debt I accumulated changing from the VA to the NY market. Here's the issue:

I am reconsidering my residency in NY State for a number of reasons primary among them the high cost and low benefit of health insurance. I have met other commercial brokers who are nonresident workers here in NY yet they spend a fair amount of time here working and attending to assets, deals etc and they are thought of by the brokerage community as being wholly available in NY--in other words no one thinks of them as being non-NY state brokers. All of this causes me to believe that I can also become a non-resident worker and not suffer from the things which folks suppose they might suffer, i.e. the perception that I might not be available to business and "up on" the local scene.

My current thinking is that I could transfer the title of my NY State home to an LLC in my wife and my name (I believe my lender, USAA, would not disapprove) and rent the house from, in essence, myself. I could establish a domicile in Virginia and get our cars licensed and insured in VA as well. At the moment I have established residency in VA my health insurance options become VASTLY better and much, much more affordable.

Does this sound like a workable plan?

Thank you!

[AtlantaTaxExpert]

Negative.

Your plan wold be considered by NY state to be what it is, an attempt to avoid NY state taxes as a resident.

[johncat]

Thanks for the reply Atlanta Tx Ex. I'm not really looking to skip out on NYS income tax. I'm looking at doing what it is I know many others do which is to have a "home" residence in another state while also having a residence(s) of some sort in NY. They work as "non resident workers" in NY. I'm not sure to what state they owe income taxes but I do know being a non-resident worker and maintaining some sort of home address in another state isn't illegal. The benefits would be especially seen in the realm of, for example, health insurance costs, because in many other states health insurance is dramatically cheaper than NY and also better for the buck. In VA, where I lived before, I was paying 240/mo with a 3,000 dollar deductible for a multi million dollar policy covering me, my wife and 4 children, which allowed a wide, wide range of the best health professionals all over. In NY you are stuck with drastically reduced benefits (about 1M is average) and a very high premium (about 1,000/mo). The prices don't get much better for high deductible plans.

My idea was to be a resident of another state, turn my NY house into an income property owned by an LLC I control (perhaps in my wife and my trust) and then renting the house from my company. I know that my bank (USAA) wouldn't mind. The company might even be an LLC in my state of residence I don't know. But I do think that this should be a doable scenario.

To your point, why is that NY would give a hoot about where I file state income tax? If I had kept my home in VA and worked in NY as a non resident worker to begin with, and employed the above plan, then they wouldn't have cared. I can't imagine why they would now.

I am willing to be wrong, however, so please straighten me out.

Thank you.

[AtlantaTaxExpert]

It probably would not make a difference to NY as long as you paid same level of NY taxes that you would if you were a resident.

I suspect that this would NOT be the case, so the NY state tax authorities would look at your whole situation to determine your tax status.

I am NOT an expert on insurance law, but it seems logical that the insurance companies would use the same standard (your LEGAL tax residency status) to determine which insurance rates apply.

The key issue, In my opinion, is WHERE your family is ACTUALLY living. If they live in New York, the New York rates apply. If they live in Virginia, the Virginia rates apply.

Just my humble opinion...

[johncat]

Thanks, ATE.