Recently, due in large part to the effective repeal of the state and local tax deduction (a/k/a the SALT deduction), (1) New York domiciliaries have become increasingly interested in changing their domicile from New York to Florida. While it may be easy enough for an individual to buy a home in Florida and move, the act of physically moving to Florida is only part of the battle. The real challenge is proving by clear and convincing evidence that the individual is no longer a New York domiciliary and does not qualify as a New York statutory resident for New York State income tax purposes. This article explains the concept of domicile and the New York statutory resident test, and highlights the actions needed to effectively change domicile from New York to Florida.
Concept of Domicile
An individual may decide to change domicile from New York to Florida for various reasons, including: personal reasons, such as proximity to family, retirement, health issues, new job or a change in climate; tax reasons, such as moving from a state with income and estate taxes, (e.g., New York) to a state without income and estate taxes (e.g., Florida); and asset protection reasons, such as homestead and tenancy by the entirety protections in Florida. The common law defines one's domicile as "living in [a particular] locality with intent to make it a fixed and permanent home ... '[D]omicile' requires bodily presence in that place and also an intention to make it one's domicile." (2) The common law interpretation of domicile is subjective and, therefore, somewhat unpredictable. New York regulations provide little additional guidance, defining domicile as "the place which an individual intends to be such individual's permanent home--the place to which such individual intends to return whenever such individual may be absent." (3)
Once established, an individual's domicile continues until moved to a new location "with a bona fide intention of making such individual's fixed and permanent home there." (4) This echoes the common law, which was stated in Matter of Newcomb, 192 N.Y. 238, 250 (N.Y. 1908): "The existing domicile, whether of origin or selection, continues until a new one is acquired." In Keveloh v. Carter, 699 So. 2d 285 (Fla. 5th DCA 1997), Florida's domicile law was similarly summarized as:
[a] legal residence or "domicile" is the place where a person has fixed an abode with the present intention of making it his or her permanent home. Once established, a domicile continues until it is superseded by a new one. A domicile is presumed to continue, and the burden of proof ordinarily rests on the party asserting the abandonment of one domicile to demonstrate the acquisition of another. (5)
The subjective nature of determining one's domicile makes any determination of domicile a fact-intensive inquiry. (6)
Because the determination of an individual's domicile is a question of fact, two or more states may conclude an individual is domiciled within their state. (7) The Supreme Court has found that the Constitution does not prohibit two or more states from each concluding that an individual is a domiciliary for state tax purposes. (8) Therefore, when changing domicile, it is critical to not only successfully establish the new domicile, but also to terminate or negate any factors that could lead another state from asserting domicile. Taking these steps will help insure only one state can successfully assert the individual is domiciled in that state. Failure to do so may subject the individual to taxation in multiple states. (9)
At common law, when it comes to changing domicile, "[m]otives are immaterial, except as they indicate intention" and actions must be "genuine." (10) New York courts have held that "a change of domicile may be made through caprice, whim, or fancy, for business, health, or pleasure, to secure a change of climate, or a change of laws, or for any reason whatever, provided there is an absolute and fixed intention to abandon one and acquire another, and the acts of the person affected confirm the intention." (11)
Accordingly, there are two elements that must be established to prove a change of domicile: 1) abandonment of the old domicile and acquisition of a new domicile; and 2) actual change of residence. (12) It is not enough to intend to change domicile, but rather the individual must also actually reside in the new location. Similarly, residing in a new location without the intent to make it the individual's domicile is not sufficient. (13) There is no definitive period of time that an individual must be in a location to establish a domicile. (14)
For example, in Matter of Richard and Hazel Rubin, New York Department of Taxation, DTA No. 817675 (Oct. 30, 2003), the taxpayers sold their New York home in July 1994 and intended to move to Connecticut, but were unable to find a suitable home in Connecticut until June 1995. New York's Tax Appeals Tribunal ruled that the taxpayers remained domiciled in New York until June 1995 when they closed on their Connecticut home even though they did not maintain a residence in New York in the interim. (15) Conversely, in Matter of Patrick, New York Department of Taxation Appeals, DTA No. 826838 (June 15, 2017), the taxpayer reconnected with a high-school sweetheart and abruptly retired from his job to move to Paris to be with her, all while maintaining an apartment in New York City. Despite spending many nights in New York during the relevant period (some of which were related to medical treatment), the tax appeals tribunal determined that the...