Page 6 - Kiplinger's Personal Finance - November 2018

LIVING

after looking at more than 30 commu- will reduce the cost of flood insur- there, says Terry LaBant, director
nities, they found a home in Sun City ance from thousands of dollars a year of wealth strategy services for RMB
Grand, on the west side of Phoenix. It to just a few hundred, says Rae. She Capital Management, in Chicago. For
had everything they wanted: friendly advises her clients to buy the insur- example, Oregon’s top income-tax rate
people, good home values, a reason- ance even if the home isn’t in a flood is 9.9%, whereas Arizona’s is 4.5%. So
able homeowners association fee, four zone—something to consider in any earlier this year, the Whites decided
golf courses, and lots of amenities and hurricane-prone location. to establish residency in Arizona. (To
activities. Across the South and Southwest, compare state taxes, go to kiplinger
The Whites paid $184,000 for a home prices have soared and supply .com/links/retireetaxmap.)
1,580-square-foot home with two bed- is limited. Buyers must move quickly To prove that the lower-tax state is
rooms, two baths and a den, and they to make a winning offer, agents say. your permanent home, you must show
pay an annual HOA fee of $1,480. They Sellers love full-price, cash offers that that you live there for at least half the
split their time between Bend and will close quickly. If you need a mort- year, or 183 days. The days needn’t be
Phoenix. Many of their friends from gage, get fully preapproved with a consecutive, but time spent traveling
Bend winter nearby, too. “We have lender. In mid September, the average from one place to another or doing
a whole ’nother life down there that 30-year fixed rate nationally was 4.5%, business out of state doesn’t count.
we totally love,” says Carol, 71. according to Freddie Mac. Plan to pay The high-tax states that retirees
The best time for snowbirds to buy cash if you want to buy the furniture, are leaving—notably Minnesota, New
is usually in the late spring, when much too, because lenders won’t finance it. Jersey, New York, Wisconsin and the
of the competition has gone home. In Some home insurers add a premium New England states—are losing a lot of
summer and fall, you’ll have fewer surcharge if you occupy the residence revenue, so they’re aggressively audit-
options to look at, but the remaining only seasonally. (Be aware that before ing retirees with homes in two states—
sellers may be more motivated and returning north, you’ll need to secure even checking their purchase activity
willing to negotiate. It’s helpful to have your southern home, this time with a on debit and credit cards, LaBant says.
an agent on the ground who can search focus on avoiding damage from exces- As proof of residency, keep a diary
for what you want and may learn of sive heat and dryness or humidity.) or log. You’ll need to get a new driver’s
prospects before they’re listed for sale, license or other state ID and register
says Dawn Rae, an exclusive buyer’s TRIM YOUR TAX BILL to vote. You must take steps to show
agent in Tampa. With the new tax law limiting deduc- that your new home is “where your
The farther from the beach, the tions on state and local taxes, more re- heart is,” says LaBant. Move family
less expensive the homes and the less tirees are moving to lower-tax states, photos, financial records and anything
likely you’ll be in a Federal Emergency or if they already have a second home else you would take out of a burning
Management Agency flood zone, which in one, they’re establishing residency house or wish you had. Create a new
network, including financial advisers,
doctors, banks, house of worship and
Hot Spots
country club. Give up any lower-cost
What You’ll Pay in Rent benefits of your former state, such as
a homestead exemption or an in-state
fishing or hunting license.
Here is the range of average monthly rent (excluding fees and taxes) from January
through March in four states popular among snowbirds.
PLAN FOR THE WORST
Whenever you live somewhere for
State Condos* Single-family homes †
an extended time, it’s smart to get
Arizona $2,500–$5,000 $3,000–$9,000 a durable power of attorney, a living
Alabama 800–1,500 1,000–2,500 will and a durable health care power
of attorney written for the new state.
Texas 900–2,000 1,400–2,500
Even with legal reciprocity between
Florida (Central) 1,500–6,000 2,500–10,000 the states, the people receiving those
Florida (East Central Coast) 2,800–6,000 3,200–9,000 documents at a medical or financial
institution may not recognize the form
Florida (Panhandle) 800–2,200 1,100–3,500
used by the other state, which will
Florida (South) 2,500–8,000 5,000–12,000
slow things down, says LaBant. ■
*Two bedrooms and two bathrooms. † Three bedrooms and two bathrooms. SOURCE: Vacasa
CONTACT THE AUTHOR AT PESSWEIN@KIPLINGER.COM.

70 KIPLINGER’S PERSONAL FINANCE 11/2018

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