I have two homes, each in a different state. Does it matter which one I used for my primary residence?

[1stBigMac]

I have two homes in two different states that I use, pay mortgages on both, establish credit and phone service in both states. I have utility bills, satellite and internet in both my homes but I not renting any of these houses. I own the two properties for 12 and 5 years, respectively.

Obviously I can not split my time equally but it is pretty close. I am retired so I do not have a job to tie my down.

[NancyG · Accepted solution]

Which state do you register your vehicles in? Which state have you registered to vote in? Which state is your driver's license from? Generally, this are the questions used to establish residency.

For federal purposes, you can deduct property taxes and mortgage interest for both your primary and secondary residence. It may make a difference for state purposes, depending on the states involved.

[1stBigMac]

Thanks! That helped.

[tdenion]

I too have 2 houses, one in Maryland,  and one in Texas.  Texas has no state income tax.  In order to establish residency in a particular state, you need to show that you stayed in said house at least 184 days per year, that is in fact what establishes your residency in any particular state.  Obviously I spend more than 184 days in Texas each year.

[Carl]

Generally one doesn't get to arbitrarily choose their state of legal residence. You have to meet state requirements and if challenged you have to actually "prove" your state of legal residence. For some states if you were a residence, you even have to prove that you were not a resident if challenged on it.

[MNFlorida]

Is there a new $10,000 cap on mortgage interest that started in 2019? This would limit how much I could claim for mortgage interest on both homes. Any help is appreciated. 

[LeonardS]

Yes, there is a cap on deductible mortgage interest.  The maximum amount that can be deducted is $10,000 each year on your tax return.

[Lhpfla]

This is how the state of Michigan views it. Taken from the MI-1040 Individual Income Tax Forms and Instructions.

https://www.michigan.gov/documents/taxes/BOOK_MI_1040_674612_7.pdf#Page=6

Resident 
Resident. You are a Michigan resident if Michigan is your permanent home. Your permanent home is the place you intend to return to whenever you go away. A temporary absence from Michigan, such as spending the winter in a southern state, does not make you a part-year resident.

[xmasbaby0]

@Lhpfla This thread is kind of old, and it is unclear why you are posting to this thread.  Do you have a question about owning two homes and what you can deduct?  One of the responses above is incorrect.  The $10,000 cap is not on mortgage interest.  The $10,000 cap is for SALT---state and local taxes including property tax that you can deduct for the homes you own for your own use.

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-re...

[Anonymous]

multiple residences in different states really raises the question of domicile.  you can have multiple residences, reside in multiple states but can have only one domicile.     domicile is important for income tax purposes and estate tax purposes and possibly other purposes.  

Many states look to a person’s domicile to determine residency. An individual generally has only one domicile, which is the place considered the true home, the place where the individual intends to return to when away. Although an individual may have more than one residence, (i.e. a place where the individual is present from time to time) it is critical that he/she solidify in the eyes of the state one domicile or true home for estate tax purposes. Due to differences in state rules, an individual may be held to have more than one domicile or true home (Hill v. Martin, 296 U.S. 393(1935)). The unfortunate consequence of such a situation is that two states can constitutionally tax the estate of the same individual as a domiciliary, so long as all the death taxes do not exceed the estate’s total value.

Howard Hughes is probably the most famous name where his estate had to deal with domicile.  He didn't establish it in either California or Nevada where he split his time.  Both states litigated the issue. It cost his estate millions in legal fees because representation was needed in both states. It took years to settle.  

[Antirustbug]

 I live in Oregon retired from the Railroad and my wife still works for the State of Oregon and we have a small child together going to a private school in Oregon. I have a large 401/k and separate E-trade investments. 

My question is, if I buy or rent a residence in Washington live their 184 days can we have separate residence were after changing my Oregon licence  to Washington, also could we keep our vehicles registered in Oregon on account my wife lives in Oregon 184 days as her primary residence. 

My last question, On my investments would I get out of paying Oregon State Income tax that's like 9%