Tax Law (Questions About Taxes)/Expatriate Purchasing Vacation Home in US
IJ, I am an expat living overseas for 5 years and do not maintain a residence in the US, but do retain my TX drivers license as this was the last state I lived in. This is really the only claim that I have to TX since mail is going to parents address. TX does not have any state tax liability.
I am planning to purchase a vacation home in Montana which does have state tax liability so I want to avoid triggering residency. Is there anything that I need to do to avoid giving MT a chance to claim me as a non-resident and tax overseas income? Will it weaken my position if my mortgage application states the condo as my "primary residence" given this is the only piece of US realestate I own. I can apply as a vacation home, but will pay a slightly higher rate if this gives me a better chance to fight MT state tax liability. Thanks Nathan
Purchase of vacation home in Montana will not trigger residency. Having a primary residency indeed will weaken your position.
The rules for residency requirements in Montana are unambiguous:
You are a resident of Montana for individual income tax purposes if you live in Montana or if you maintain a permanent home in Montana. A permanent home in Montana means a dwelling place you habitually use as your home, whether or not you own it and whether or not you may someday leave.
It is worthwhile to apply for mortgage for a vacation home to avoid the risk of paying state tax on worldwide income.
Please also see http://www.taxesforexpats.com/articles/expat-tax-rules/state-taxes-expat-tax-ret
for the overview of expat state tax position.
Hope this helps,