Tax residency planning.

NY State (and most aggressive-audit states) test residency two independent ways. Failing either test means you owe NY income tax on your worldwide income for the year. This is the structural piece most clients miss when they try the “split-residency” move:

1. Domicile test: Are you a domiciliary of NY? Domicile is the “true, fixed, permanent home and principal establishment.” You can have one domicile at a time, and it changes only when you abandon the old one and establish the new one.
2. Statutory residency test: Did you spend more than 183 days in NY and maintain a “permanent place of abode” in NY? If yes, NY treats you as a resident regardless of where your domicile is.

The implication: you can be domiciled in FL but still owe NY income tax if you spend >183 days in NY and keep an NYC apartment available to you. This trips up a meaningful number of first-time residency movers — they thought renting out their NYC pied-à-terre or maintaining a guest room solved the problem. It does not.

NY State doesn’t publish an exhaustive list, but audit practice has converged on the following 11 factors. Each one looks at whether your behavior is consistent with the new domicile or the old:

1. Home(s): Where is your primary residence? What’s the square footage of each home you own? Where is the more expensive / more substantial home?
2. Time spent: Where do you spend the majority of your time? (This is separate from the statutory test below — it’s about behavior, not day counting.)
3. Business connections: Where is your business located? Where do you work? Where are your business meetings?
4. Near and dear: Where are your most valuable / sentimentally meaningful possessions? Art, jewelry, family heirlooms, wine collection. NY auditors will literally ask about insurance schedules.
5. Family connections: Where is your spouse / partner? Where do your minor children attend school? Where do extended family members live?
6. Active community / social life: Where are you active in religious, charitable, or civic organizations? Which gym do you go to? Which clubs are you a member of?
7. Voter registration: Where are you registered? Where do you actually vote?
8. Driver’s license + auto registration: Where is your license issued? Where are your cars registered?
9. Bank accounts: Which state holds your primary checking, brokerage, and credit relationships?
10. Will + estate planning documents: What state law governs your will, revocable trust, healthcare directive?
11. Professional service providers: Where are your CPA, attorney, doctor, dentist, veterinarian located? Where do your children’s pediatricians practice?

The auditor doesn’t need you to fail all 11 — they need to show that the preponderance of facts suggests NY remained your true permanent home. A taxpayer who claims FL residency but maintains an NYC apartment, keeps their art insured at NYC addresses, sends their kids to NYC schools, and meets their CPA monthly in NYC is going to lose.

The standard is clear and convincing evidence on the taxpayer to prove they’ve abandoned NY domicile. The default presumption is in NY’s favor.

Two conditions, both required:

1. You spend more than 183 days in NY during the calendar year (even partial days count — see below).
2. You maintain a “permanent place of abode” in NY for substantially all the year.

What counts as a day in NY

The default rule: any presence in NY during the day counts. Land in JFK at 11:30 PM, that’s a NY day. Connect through LGA on the way to FL, that’s a NY day. The auditor expects you to be able to prove your whereabouts every single day of the year — credit card receipts, cell phone tower records, EZ-Pass logs, calendar entries.

Limited carve-outs exist: pure travel days where you don’t leave the transportation infrastructure (e.g., connecting through JFK without leaving the terminal), and certain medical days. But the burden of proof is on the taxpayer.

What counts as a “permanent place of abode”

Almost anything that’s available to you for use as a residence:

• An apartment you own or rent — including one you don’t actually use
• Your spouse’s NYC apartment (even if not in your name)
• A NYC pied-à-terre kept “for guests”
• A corporate apartment your business maintains for your use
• A vacation home in the Hamptons or Westchester (yes — this counts as a NY abode)

Renting out your NYC apartment on a long-term lease (12+ months, arm’s length) typically takes it out of the “available to you” bucket. Short-term rentals (Airbnb, less than 12 months) typically do not.

This is why high-income clients seriously committed to a NY exit usually sell or long-term-lease the NYC apartment — to remove the “permanent place of abode” trap.

NY State’s Department of Taxation and Finance runs one of the most aggressive non-resident audit programs in the country. The Office of Conciliation and Mediation Services routinely processes high-income departure audits — high-dollar enough that audit teams pursue claims at high volume.

What triggers an audit

• Filing a part-year return for the first year of claimed non-residency
• Large income drop between the last NY-resident year and the first non-resident year
• Continued NYC business income, board positions, or other NY-source income
• Real property ownership in NY
• Random selection (yes, this happens)

What the auditor requests

An NY departure audit typically asks for:

• Credit card statements for the calendar year, broken out by location of every charge
• Cell phone records (which tower handled each call/text)
• EZ-Pass / toll records
• Airline travel records (ticket purchases, frequent-flier statements)
• A complete diary or calendar reconstructed from any source available
• Documentation of insurance addresses (homeowner’s, auto, umbrella, art)
• Voter registration history
• School records for any children
• Medical and dental records (which providers were used)
• Charity and country club membership records

What the auditor is looking for

Inconsistencies that suggest behavior is still NY-centered. They’re not trying to prove you spent 200 days in NY — they’re trying to prove your life is still in NY. A taxpayer who claims FL domicile but whose credit card charges show 70% NYC restaurant spend, whose dog goes to a NYC vet, whose CPA is in NYC, and whose spouse maintains a Hamptons house is going to be reassessed as a NY resident.

Nine US states have no broad-based personal income tax. For NY HNW relocations, seven are practically relevant:

• Florida — by far the most common destination. Established HNW infrastructure (CPA, legal, medical), no state income tax, Save Our Homes 3% cap on homestead-elected primary residence. Palm Beach + Miami are the established markets; comparison →
• Wyoming — the cleanest tax move (no income, no transfer, no capital gains), but requires actual lifestyle change. Jackson Hole is the primary HNW destination; comparison →
• Texas — established HNW infrastructure in Dallas, Houston, Austin. Property taxes are high, which partially offsets the income-tax savings.
• Nevada — Las Vegas + Reno. Less HNW infrastructure than FL/TX but improving rapidly.
• Tennessee — Nashville is growing as an HNW destination. Hall Tax (dividend + interest tax) fully repealed in 2021.
• New Hampshire — limited HNW infrastructure. The Interest and Dividends Tax was phased out 2021-2025; W-2 income has never been taxed.
• South Dakota — mostly used for trust jurisdiction (Sioux Falls is a major dynasty-trust center). Less commonly a primary residence move.

Alaska and Washington (no income tax on W-2; capital gains tax effective 2022) are technically zero-income-tax states but rarely chosen for HNW residency moves.

State capital gains preference (or lack thereof)

None of the no-income-tax states tax capital gains. For clients with a concentrated capital event on the horizon, the savings on a $50M LTCG event:

• NY + NYC: $7.4M state + local tax
• CA: $6.65M state tax
• CO: $2.2M state tax
• FL / WY / TX / NV / TN / NH / SD: $0

These deltas can dwarf 10+ years of income-tax savings. Timing the residency move relative to the capital event is often the single most important structuring decision.

The capital event timing question is: when do I physically and legally move so that the gain is recognized under the new state’s rules?

The core principle

States tax income based on residency at the time the income is recognized, not when it’s earned. A business sale that closes in March 2027 is taxed by your state of residence in March 2027 — not by where you lived when you built the business.

The implication: if you’re selling a business or taking an IPO liquidity event, the cleanest tax outcome comes from establishing residency in the new state before the gain is recognized.

The practical timeline

Most CPAs counsel a 12-month rule for clean exits: establish residency by January 1 of the tax year in which the capital event will close, and don’t close the event until the new state of residency is unimpeachable. For a closing planned for any 2027 month, the practical move date is mid-2026 at latest.

The trap: partial-year returns

Moving in October of the same year a capital event closes is dangerous. NY State’s position will be that the taxpayer was a NY resident at the time of the event, owes NY tax on the entire gain, and the move was for tax purposes. Audit risk is high. The savings are real but come with audit overhead.

Quasi-Maranello: pre-event installment sales

Some clients use installment sale structures to defer recognition into a future tax year when residency is cleaner. Cash receipts in 2027 of a sale closed in 2026 are taxed at the state of residency in 2027. This requires careful structuring with seller financing or note consideration.

A clean NY exit involves the following steps, ideally executed within a single calendar year to clean up the first non-resident return:

Real property

• Purchase or lease primary residence in target state BEFORE moving any other items
• File homestead application in FL (or equivalent) — must be on Jan 1 to claim that year’s Save Our Homes
• Sell or long-term-lease (12+ months, arm’s length) the NYC apartment
• If keeping a NY vacation property, ensure it’s materially less substantial than the new state primary

Personal documents

• New state driver’s license (surrender NY license)
• New state voter registration (cancel NY registration)
• New state vehicle registration
• Update will, revocable trust, healthcare directive, POA to new-state attorney + new-state law
• Update homeowner’s + umbrella insurance addresses
• Update auto insurance to new state
• Update art / valuable-articles schedules

Banking + financial

• Open new primary checking + savings in new state
• Update primary brokerage account address to new state
• Transfer safe deposit box (or close NYC box)
• Update credit card billing addresses

Professional services

• Engage new-state CPA. The NY CPA can continue handling NY-source income, but the relationship of record should be in the new state.
• Engage new-state attorney
• Establish new-state physician + dentist
• New-state veterinarian for pets
• Cancel NY gym memberships, club memberships, dining memberships (or convert to non-resident)

Family + social

• School transition for any minor children
• Join new-state community organizations, churches, synagogues, charities
• Resign from NY-based board memberships and civic committees (or document a structural reduction)

Day counting

• Install a day-tracking app or maintain a contemporaneous calendar from day one
• Aim to spend less than 183 days in NY
• Better: aim to spend <120 days in NY (gives audit cushion)
• Keep receipts, EZ-Pass records, and credit card statements organized by date — these are your audit defense

Keeping the NYC apartment “for guests”

Functionally available = available. The auditor will assume the apartment is available to you regardless of your claimed use. Sell or long-term-lease — there’s no middle ground that works.

Sending children to NYC schools

This single fact tanks 80%+ of claimed NY exits. If children are in NYC private schools and the family is effectively continuing to live in NY part-time, the domicile claim will fail.

Maintaining the same lifestyle pattern

Same restaurants, same gym, same hair salon, same barbershop. The auditor pulls the credit card statements and the pattern is obvious. The move requires actually changing where you spend your money.

Treating it as a tax planning exercise

You can’t move on paper. You have to actually move. The clients who succeed are the ones who genuinely want the new state lifestyle — and use the tax savings as a bonus. The clients who try to optimize without changing their life lose at audit.

Pre-move planning gaps

The move-year tax return is critical. Capturing dates, residency-change documentation, asset transitions — these have to be clean. Engaging the new-state CPA before the move (ideally 6-12 months before) is the right cadence.

Underestimating the capital-event timing

A $50M capital event in the same tax year as a residency change is the most-audited fact pattern in NY State. The gain WILL be challenged. Even if you ultimately prevail, the audit defense costs $200K-$500K in professional fees and 18-36 months of stress. Better to time the move cleanly.