By itself, no. Depending on how long the temp assignment is, you may have a conflict between Illinois and Colorado over residency.
There are two issues here. The first is the concept of “domicile“. Your domicile is your permanent home. It is where you have significant social, family, and legal ties, such as your church, your doctor, your voter registration, your bowling league, and anything else that is financially or socially significant to you. There is no single factor that determines your domicile, it is determined by considering all the factors of your living and financial situation. You can only have one domicile at a time.
Using your Colorado address to refinance your Illinois property it does not change your domicile to Colorado if Illinois is your real permanent home, and if it is always your intent that your time in Colorado is temporary. In fact, your temporary stay in Colorado could be a considerable length without changing your domicile, as long as you still maintain those important legal, social, and financial ties to Illinois.
Where are you run into trouble is with some states that are aggressive about determining residency status for income tax purposes. For example, New York and California will generally try to claim that you are a state resident if you spend more than 183 days in the state during the year, even if you do not change your domicile. That can create a situation where both the state you are domiciled in and the state you are temporarily living in will both want to tax you as a resident.
If you will be living in Colorado less than 183 days this year, you are probably safe. Illinois is your state of permanent residence and you are a non-resident in Colorado. You will be required to file a Colorado nonresident tax return and pay income tax on all of your Colorado-based income, and then you will file an Illinois resident tax return and pay income tax on all your worldwide income. Illinois will give you a credit for taxes that you paid in Colorado so you don’t pay double tax on your Colorado-based income.
If you will be living in Colorado more than 183 days this year, I don’t know what will happen. I did a little checking on the Colorado tax website, and it did not have a strict time limit for determining residency. So you will probably be able to file as a non-resident the same as I described above. However, you may want to check with a local tax professional.
The bottom line is that changing the address on your mortgage does not by itself change your residency for tax purposes or your domicile, although it is one factor among many that would be considered. You can still consider yourself to be domiciled in Chicago if that is your permanent home. You would have to do further checking with the state of Colorado to see if they will have a problem with you filing a nonresident tax return.
