Another Californian to Austin, TX

[Ryan Stover]

Hey BP fam,

I love living in San Diego. Friends, family, surfing. BUT, as I've heard "Hate Taxes? Love Texas!"

1.) Could I buy a house in Austin, rent out all of the rooms except my room, and change my residence to TX? I want to do this so that my properties in Oregon will be taxed at the TX rate rather than CA.

2.) Could I live in my parents' old house in San Diego, right under California's nose, so I get all the benefits of California (weather, surfing, friends/family)?

Thank you and Happy 2021!

[Jordan Moorhead]

@Ryan Stover if you buy a house in Austin as an owner occupant you need to live in it for at least a year or it's mortgage fraud.

[Ryan Stover]

Yes, I would do that and I would actually keep the room open so that the place is my domicile. I could even get a Texas driver's license and Texas Bank Account. But, if I stay in CA under the radar, would that be fine? Does CA do crazy audits of phone GPS and credit card transactions?

[Bryan Noth]

@Ryan Stover going to agree with @Jordan Moorhead on this one. If you purchase with a loan as an owner occupant the intent has to be to live there or it could be considered fraud. The lender will have to do a verification of employment prior to approving the mortgage and you need to be able to prove it's a primary residence as well (driver's license address, incoming mail to the address). If you are trying to structure the taxable entity such that you pay taxes based on where the business is located you need to consult a financial planner as well as appropriate legal counsel. Those state rules can be complicated and can depend on the type of entity as well, i.e. LLC, S-Corp, C-corp, Trust, etc.

[Todd Rasmussen]

@Ryan Stover

You might get away with it, but it is definitely tax fraud. CA FTB is pretty clear that presence in CA other than temporary in nature constitutes residency. Additionally taking a phone call in CA is essentially impossible to be present in CA and not conduct business in CA.

[Eamonn McElroy]

Statute of limitations never closes on a fraudulent tax return or a return that is never filed....

And yes, this is textbook fraud.  We have (1) an intent to deceive and (2) financial gain.

Going to be hard to argue that you were in TX when cell towers in CA showed you as connected.  And yes, in the era of big data, state and local DORs have started to use cell company records during residency audits.  It's a new technique in their arsenal.  So, if you have your phone near you 24/7 like most individuals, don't lie to the authorities about where you were.

And, it's not a good look that you posted to a publicly accessible forum, under your full name, detailing your plan to defraud the CA FTB before you carried it out...

Maybe if you don't like the high taxes in CA and the tax base erosion from CA to TX, you and your friends should organize and work to change the CA tax rates and laws.

[Michael Plaks]

@Ryan Stover

You're thinking about several levels of fraud. Of course you might be able to get away with it, but it would remain fraudulent.

This is one of the 120 reasons we Texans do not want any Californians here. :) Unless you're willing to legitimately move here and contribute to our economy and culture.

[Rion Redinger]

@Ryan Stover

The only way I see to take advantage of both environments (TX tax freedom and CA beach and weather) is to move to Texas and frequently travel to CA to vacation / business trip, but make sure to make Texas your home in all ways. All these other folks have the authority to give you the legal ways you could get in trouble, this is just my way of looking at it from a different point of view.

[Jordan Moorhead]

@Ryan Stover yes that's still fraud even if you have a room open. I've heard that it's punishable by up to a year in jail, and you've left a trail of intent on a public internet forum. Jail would be the ultimate househack though!