Living in Austin 9 months of the year, possible? (Clarksville, West: sales, rental)

[Golden GopHorn]

This may be an odd question but my wife and I are considering moving to Austin and still spending our summers in MN. Am I being completely illogical? We currently have a home that we may sell outright or rent 9 months of the year in a Minneapolis suburb in addition to a family cabin (her parents). Also, she is a pharmacist that can work in both cities with great flexibility at cvs or Walgreens as a float pharmacist. I am a somewhat successful technology sales specialist that reps accounts in MN. With the way business is done these days via email, webex, and phone I feel like a few days a month during fall, winter and summer in MN would keep my customers happy and I'd be home just in time to golf in the summer.
We love Minneapolis but living inside (hate all winter outdoor sports) for 9 months a year has just gotten to be too much and we would like to buy a place in TarryTown, Clarksville, or Old West Austin but don't need a huge house. This is a quality life play and we are willing to sacrifice "things" for healthy active living. I am guessing that most will say just move to Austin and commit to a new position but i have a pretty good thing going with my job and it will help allow us to have an income ($300k+ combined) to support thinking about this. Also won't the state income tax savings help out. Am I completely out of my mind?

[CptnRn]

It makes good sense to me, to spend the hot Texas summers somewhere cooler. It might make more sense to rent your current home out for a full year up north and stay at the cabin up there for the 3 months you are there.

As far as income taxes, wouldn't you still have to pay income taxes on property rental proceeds that you own up there? Or does the state not tax that sort of income? Lack of state income tax will help here but local Property Taxes make up a lot of the difference. Run the numbers and see if it makes sense for you.

Now you've got me talking to my wife about spending a few months up north each summer to get away from the heat here.

[OpenD]

Originally Posted by Golden GopHorn

This may be an odd question but my wife and I are considering moving to Austin and still spending our summers in MN. Am I being completely illogical?

Not at all. I know several people who get away from the brutally hot summers here by heading north to cooler climes. It's just not the easiest thing for the average person to arrange logistically. Having plenty of money helps.

Originally Posted by Golden GopHorn

Also won't the state income tax savings help out. Am I completely out of my mind?

Savings? Once you move you'll be a Texas resident, reporting your income in Texas. Summers in MN will be non-resident work, not reportable in MN. The only way you can normally split income reporting is when you move your permanent residence from one state to another.

[Golden GopHorn]

I meant savings in state income tax savings MN has a 7% while TX has no state income tax. I do understand that tx property tax is much higher.

[AustinGuy]

This sounds like a great plan to me. I'd love to setup my life to be out of Austin from at least June-Sept. Last year I managed to be out for the month of August, but that wasn't nearly long enough.

[CptnRn]

Originally Posted by Golden GopHorn

I meant savings in state income tax savings MN has a 7% while TX has no state income tax. I do understand that tx property tax is much higher.

My point was, any income earned from sources in MN still have to pay MN income taxes.

We had some investment earnings from an inheritance that were held by a bank in AZ and had to pay AZ Taxes on those earnings that year. Even though we have never lived there.

[OpenD]

Originally Posted by CptnRn

My point was, any income earned from sources in MN still have to pay MN income taxes.

We had some investment earnings from an inheritance that were held by a bank in AZ and had to pay AZ Taxes on those earnings that year. Even though we have never lived there.

I'm not a tax expert, and neither are you, so the OP should consult a tax or law professional to be sure, but...

My OPINION is... if his residence is in Texas, neither his 3 months annual work in MN nor his rental profits in MN will be reportable as income in MN, unless they have unusual legislation in place.

On state that DOES have unusual legislation to cover that situation is Hawai'i, which requires non-resident property owners to use a local property management company, applies 4% General Excise Tax to rental revenues, and when property is sold, and charges 10% Capital Gains Tax to non-resident sellers.

But it's not that much of an issue in most other states.

[CptnRn]

Originally Posted by OpenD

I'm not a tax expert, and neither are you

And neither are you...

In my opinion, earnings from both his work in MN and his rental income in MN are very probably taxable in MN. There are very few places where they are not.

[OpenD]

Originally Posted by CptnRn

And neither are you...

In my opinion, earnings from both his work in MN and his rental income in MN are very probably taxable in MN. There are very few places where they are not.

That's not my experience.

[Golden GopHorn]

Yep, it sounds like I need to reach out to my accountant. My understanding was that if I was a Texas resident, I would be taxed as a Texas resident regardless where my income would come from. My company is headquartered in Texas but the branch I serve is in mn. Our branch does have reps in Souix falls that serve both mn and south Dakota but I am certain they don't pay state income tax.
One thing that I did find is that our current governer has proposed changing the resident standards(huge amount of snow birds) from anything over183 days to 60 days.