Avoiding California Residency For Investors – PillarWM

Investors often own vacation homes in sunny coastal states. California is the number one choice for people who wish to escape from their daily routine and take a break. However, many such individuals may also be interested in avoiding California residency for tax purposes. If you want to learn more about California residency and how to avoid it, you may be interested in speaking with professional advisors from wealth management firms. Learn about tax planning strategies by ordering a copy of our book 7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning For Families With Liquid Investable Portfolios Between $5 Million and $500 Million.

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STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION

 

7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning

 

The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.

Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.

As an investor, you should be interested in finding different ways to make your portfolio and earnings more tax efficient. This often involves restructuring your portfolio or changing your state residency. You can learn more about tax planning services by speaking with our wealth managers.

Avoiding California residency

Understanding California Residency

Plenty of investors own property and spend a good part of the year in California. The state’s sunny weather and diverse landscapes certainly make it an attractive destination for many. However, this state is also known for its sky-high taxes. It taxes any capital gains as income and does not distinguish between short-term and long-term capital gains.

This capital gains tax rate ranges from 0% to 37%, depending on the capital gains type.

California Tax Brackets

The tax brackets for single taxpayers in California are as follows:

• $0 to $8,809: 1.00%

• $8,809 to $20,883: 2.00%

• $20,883 to $32,960: 4.00%

• $32,960 to $45,753: 6.00%

• $45,753 to $57,824: 8.00%

• $57,824 to $295,373: 9.30%

• $295,373 to $354,445: 10.30%

• $354,445 to $590,742: 11.30%

• $590,742 to $999,999: 12.30%

• $1,000,000 and over: 13.30%

The tax brackets for married taxpayer and for qualifying widows are as follows:

• $0 to $17,618: 1.00%

• $17,618 to $41,766: 2.00%

• $41,766 to $65,920: 4.00%

• $65,920 to $91,506: 6.00%

• $91,506 to $115,648: 8.00%

• $115,648 to $590,746: 9.30%

• $590,746 to $708,890: 10.30%

• $708,890 to $1,181,484: 11.30%

• $1,181,484 to $1,999,999: 12.30%

• $2,000,000 and over: 13.30%

What Makes You a California Resident?

As an investor, you may be wondering what makes you a resident of California for tax purposes. There are multiple criteria that determine your residency in the state.

So how long can you stay in California without being a resident? You will be considered a California resident if you are present in the state for more than nine months within a taxable year. However, you should also note that being present in the state for less than nine months does not necessarily make you a non-resident.

For example, you may maintain a permanent home in another state and conduct activities in California while spending more than 6 months of the taxable year in the state. In this situation, you may be considered a resident for tax purposes.

The state looks at a whopping 29 factors when determining who is and isn’t a resident. This includes:

• Birth

• Marriage

• Preparation of Tax Returns

• Raising a Family in the State

• Owning a Family Corporation

• Owning a Cemetery Lot

• Serving as an Officer and Employee of a Business Corporation

• Attending and Donating to Churches

Avoiding California Residency

You can avoid California residency by ensuring you do not fall under the residency requirements mentioned above. This means you should not spend more than nine months of the taxable year in the state. Additionally, you should not spend more than six months in the state if you own a permanent home elsewhere and have conducted activities other than as a guest, seasonal visitor, or tourist. You can learn more about how to avoid California residency by speaking with our wealth managers.

Breaking California Residency

If you are already considered a California resident, you may be interested in knowing, “How do I break my California residency?”. There are many different ways to do this. However, each approach involves specific requirements to be met.

Some methods include:

• Selling your California home.

• Leaving your employment in California.

• Establishing and spending time in a new residence located in another state.

• Stopping business activities and severing social ties in California.

Do I Need to File Taxes if I’m Not a California Resident?

If you are not a California resident, you may still need to pay certain taxes. This includes taxes on:

• Services you have performed in the state.

• Rent from any properties located in California.

• California property sales or transfers.

• Income from any California businesses, trades or professions you own.

If you are an investor that meets any of the above criteria, you may still be required to file taxes for California.

Does Owning a Vacation Home in California Make You a Resident

After reading about the factors that make you a California resident, you may be wondering if it is possible for you to own a vacation home in the state without being considered a resident.

The good news is that simply owning a home in California doesn’t make you a resident. You can even spend brief vacations at your California home without worrying about taxes. However, if you start working in California during that time or are deriving income from inside the state, you will have to pay taxes.

How a Wealth Manager Can Help

Investors who are interested in saving taxes by changing their residency can benefit from hiring a wealth manager. This is a special type of financial advisor that provides services in a variety of areas.

Wealth managers are uniquely suited to help high net worth and ultra-high net worth investors with their needs, as they exclusively take on clients with high-value assets. For example, at Pillar Wealth Management, we offer our services to clients who are interested in investing between $5 million and $500 million.

Some of the ways a wealth manager can help you include:

Tax Planning

Most investors would like to pay fewer taxes without breaking any laws. If you are a California resident, you may be able to reduce the amount of taxes you owe by changing your residency. However, there are plenty of other ways to reduce your taxes. You can learn about tax planning strategies by requesting a free copy of our book 7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning For Families With Liquid Investable Portfolios Between $5 Million and $500 Million.

Wealth managers can help you in this area with their tax planning services. They can also offer to restructure your portfolio to reduce the taxes you legally owe possibly. This makes wealth management services essential for any investor that wishes to become more tax efficient.

Portfolio Analysis

Wealth managers also offer portfolio analysis services for investors. These professionals can study your portfolio in detail and analyze any risks or inefficiencies present. They can then offer expert advice on how you can plan for these risks or improve your portfolio performance. We discuss some vital portfolio performance improvement strategies in our guide.

Retirement Planning

Investors that wish to maximize their retirement savings and achieve their dream retirement can benefit from a wealth manager’s retirement planning services. These wealth management professionals can help you select the right savings strategy, create budgets, and make the right portfolio decisions that are in line with your retirement goals. You can learn how to expand your portfolio with retirement-friendly assets by reading our special guide.

Estate Planning

If you own properties in California, you may be required to pay taxes on them when you pass on. A wealth manager may be able to help you avoid such taxes using their estate planning knowledge.

This includes setting up a will, trusts, and deciding how your wealth should be distributed beforehand. These tasks can be difficult to complete on your own, so plenty of investors turn to wealth managers for assistance with them. You can learn more about our estate planning services by speaking with one of our wealth managers.

How to Choose the Right Wealth Manager?

If you are interested in using a wealth manager to help you with tax planning, you should seek out the right person for the job. Hundreds of wealth managers offer their services across the country, so picking the best professional can be tricky.

You can use the following steps to narrow down your choices and determine the right wealth manager for your needs:

Internet Searches

Most wealth managers maintain a digital presence in the digital era. This means they have websites or work for wealth management firms with websites. In addition to this, they may maintain a professional work profile on sites such as Linked In. This also means it is easier than ever to connect with wealth managers online.

You should be able to find numerous wealth managers who offer their services in your area by performing a quick Google search. It would help if you created a list of around ten wealth managers using online searches.

Check Out Reviews

After discovering which wealth managers are available to you, it is vital to read reviews for each one. Reading online reviews is a smart way to separate the good wealth managers from the poor quality ones. After all, many wealth managers may tout themselves as “the best” around, but few actually live up to their claims.

Consider looking up reviews on independent review sites that are not affiliated with any wealth management firms. In these reviews, you should look for any mention of the wealth manager’s reachability, expertise, and fees.

A good wealth manager will always be easy to reach, possess expertise in various financial areas, and will not charge hidden fees for their services.

Speak with the Wealth Manager

Once your list of wealth managers is down to three or four candidates, you should try speaking with each one individually. Set up a special in-person meeting or a phone conversation and gauge the wealth manager’s expertise. An excellent place to start is simply talking about your portfolio and asking how they can help make it more tax-efficient. You can also ask them some of the questions we discuss in our guide to choosing a financial advisor.

Why Choose Pillar Wealth Management?

Investors across the country reach out to us for our tax planning services. They value our six decades of industry experience and trust us to guide them in various wealth management and wealth protection areas. Please set up a free introductory meeting with us to get started with our wealth management services.

Authors

To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.

We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.

You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.

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