before selling a stock for large profit, can I move from Calif. to another state with no state tax and avoid..

Question

If i want to avoid paying state income tax on a large sum of money I might make off of the sale of a stock, can I move to another state like Texas that has no state income tax and not have to pay California state tax on it? How long will I have to live in Texas before selling the stock? Can I keep our house in California and rent it out or would I have to sell it in order to avoid the tax in California?

Answer 1

Ha! That's funny.

If you move in mid-year, you will still pay taxes in both states. It will be prorated, but prorated on your income for the whole year, I believe. So that wouldn't help you.

The only real solution would be to move for a whole year, I suspect, from January 1 all the way thru Dec. 31 of the same year, at least. Keeping your house and renting it out shouldn't be a problem, but if California catches wind that the move isn't 'real' (and who knows how they'd interpret that), they may come after you for tax fraud. On the other hand, if you did move for real, then California wouldn't have any claim on your taxes any longer. Since taxes on capital gains are not realized until the stock is sold, you should come out ok.

It wouldn't hurt to check that with a tax accountant in your proposed new state just to be sure, but I'm reasonably certain of it.

Answer 2

no