Which date should I use as start date of my California residency & which income will be taxable by California?

[fkhalilz]

Hello,

We moved to California from Texas in 2021. There were multiple dates involved in this move. Here are some of them:

• The date of sale of my house in Texas
• My California flight date
• My wife's California flight date
• My household stuff arrival date in California by movers
• My car arrival date in California by movers
• My California automobile license and registration date
• The date of my previous tenant lease termination. Background: We converted a rental in California that we have had for several years to become our primary residence and did some upgrades while we lived with a family member in California while upgrades were being done.
• The date my wife and I moved in to this house after upgrades were completed.

Which one of these dates should be used as the start date for our California residency? How does TurboTax determine this date?

My 2nd question is: We have some capital gains from sale of 2 rental properties in Texas in 2021 just before we moved to California. Will any of this capital gains be taxable by California? We were a resident of Texas at the time we sold these properties.

Thank you!

[BillM223]

In California, a resident is defined by his/her "domicile" (see CA Revenue and Taxation code).

When your domicile changes to California is a matter of facts and circumstances. For example, what make a new place your "Domicile"?

It's various things, like when you got your drivers license there; when you registered to vote there; when you bought property there; when you got a utility account or landline there (if people still do that); when you notified the Post Office at your previous location to have your mail forwarded.

Most importantly, "domicile" is a matter of intent. When did you move there with the intent to live there?

As you can see, there is not a simple definition of what constitutes "domicile", and you will have different dates for different questions above.

What you have to do is pick a date and then be prepared to defend it if the state ever asks you about it.

NOTE: this is also discussed in the instructions for FTB Publication 1031, but it is not available online. You can order it at this webpage.

And as for your second question, I believe that you should be able to enter adjustments for capital gains made while a CA nonresident. In the CA interview, look for adjustments for nonresidents.

[fkhalilz]

Thank you for your response.

If "intent" is the most important factor, how do we prove to the state of California when we had the intent to settle in California? It could be argued that the day I closed on my house in Texas, I had the intent to be domiciled in California even though I was still living in Texas until sometime later. On the other hand, one can argue that we were still considering our options when we arrived. I guess my point is I may not be able to defend any date that I pick to satisfy the state of California. How critical is this?

[JohnB5677]

It would be very seldom that a state would question a date of residency; however, it is possible.

• Was there a reason to move to California?
  • New job
  • Transfer
  • Job opportunity
  • Family
  • Life style
  • Wanted a place by the ocean?
  • When did you start looking for a house or apartment?
  • Other
• When you answer those questions you will be closer to the answer
• However, it wouldn't be before you actually arrived in California

Also, see  CA-DMV-Residency – Documents List  and  NEW TO CALIFORNIA

[fkhalilz]

My wife and I are both retired. So it was not due to a job or job transfer. We also had the rental house for a number of years in California where we ended up moving into. So it was not due to purchase of a new house in California. As for other less concrete factors, my wife and I had dreamed of moving to California for as long as I can remember. We loved the weather, etc. But this does not give a concrete date either.

I am going to pick the date we got our driver's license and registered to vote in California. I hope this is a reasonable choice.

Thanks!

[DanP0428]

@fkhalilz 

That is a perfect choice for a date.  Enjoy California, it can be as close to heaven on earth as you can get.