Avoid CA taxes during retirement

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Topic Author
hammond
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Avoid CA taxes during retirement

Post by hammond »

Watching this:
https://youtu.be/x2shSiKmYRw

I plan to have 2-3m in VOO for potential early retirement. And annual spending is about 80-100k. So I think if I am smart about it I don’t have to pay any federal taxes (assuming no w2 income).

What is the math for CA taxes? I like CA and see myself retrieving here (but who knows). Is there a way I can pay 0 in state taxes (capital gains and overall).
WestCoastPhan
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Re: Avoid CA taxes during retirement

Post by WestCoastPhan »

If you are MFJ, and you are at $96k of income you'll pay about 3% overall in CA income tax. It starts getting onerous if you're making more (e.g., the 9.3% rate kicks in at $122k).
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hammond
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Re: Avoid CA taxes during retirement

Post by hammond »

Thanks! 9.3% as a progressive rate?
WestCoastPhan
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Re: Avoid CA taxes during retirement

Post by WestCoastPhan »

hammond wrote: Sun May 15, 2022 10:43 am Thanks! 9.3% as a progressive rate?
Yes. See: https://www.nerdwallet.com/article/taxe ... -state-tax
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grabiner
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Re: Avoid CA taxes during retirement

Post by grabiner »

CA has the same tax rate on all types of income, so you will pay tax at your regular CA rate on any capital gains. (CA does follow the federal rules for the amount of capital gains, so you can offset gains with losses, including losses carried over from previous years.)

CA will not tax your Social Security, while 85% of it may be federally taxable given the dividends and capital gains you have. Thus you might wind up paying some federal tax because 85% of your Social Security exceeds the standard deduction.
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bberris
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Re: Avoid CA taxes during retirement

Post by bberris »

Is it that bad? Your taxes would be much higher in Minnesota.
quietseas
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Re: Avoid CA taxes during retirement

Post by quietseas »

CA is not necessarily unfriendly to retirees with low incomes and low expenses. A house bought years earlier with low property taxes hopefully in a place you will enjoy for decades more (although you can now transfer tax basis to another property with recent string of propositions setting this up). No CA income tax on SS income. Low spending so less impact of higher state sales taxes. One of the most highly progressive state income tax rate structures.
boglesmind
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Re: Avoid CA taxes during retirement

Post by boglesmind »

hammond wrote: Sun May 15, 2022 10:33 am Watching this:
https://youtu.be/x2shSiKmYRw

I plan to have 2-3m in VOO for potential early retirement. And annual spending is about 80-100k. So I think if I am smart about it I don’t have to pay any federal taxes (assuming no w2 income).

What is the math for CA taxes? I like CA and see myself retrieving here (but who knows). Is there a way I can pay 0 in state taxes (capital gains and overall).
1. California has progressive tax rates ranging from 1% to 12.30% for MFJ. See CA 2021 tax calculator, rates and tables

Code: Select all

taxable Income				Tax
$ 0 		to  	$18,650 		 0.00 + 1.00%   over  0
$18,650 	to  	$44,214 		186.50 + 2.00% over 18,650
$44,214 	to	$69,784 		697.78 + 4.00% over 44,214
$69,784 	to	$96,870 		1,720.58 + 6.00% over 69,784
$96,870 	to	$122,428 		3,345.74 + 8.00% over 96,870
$122,428 	to	$625,372 		5,390.38 + 9.30% over 122,428
... etc
2. Can itemize CA deductions (property tax etc) even if you take federal standard deduction due to SALT (State And Local Taxes) limit of $10K
3. CA has no special treatment for CGs and QDI
4. CA fully exempts Social Security income from taxes
5. CA has prop 13 limit on property taxes. We pay roughly 1% on assessed value + parcel taxes not based on assessed value and the toal comes to ~1.25% of assessed value. Assesed value doesn't increase more then 2% a year. Friends in Austin, Dallas etc, for example, pay far more in property taxes (2+% of assessed value which increases every year, no limit)

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Re: Avoid CA taxes during retirement

Post by boglesmind »

bberris wrote: Sun May 15, 2022 1:34 pm Is it that bad? Your taxes would be much higher in Minnesota.
not bad. see my detailed response above.
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Re: Avoid CA taxes during retirement

Post by bberris »

boglesmind wrote: Sun May 15, 2022 2:02 pm
bberris wrote: Sun May 15, 2022 1:34 pm Is it that bad? Your taxes would be much higher in Minnesota.
not bad. see my detailed response above.
For comparison, Minnesota's 5.35 % rate starts at 0 income. And 6.8 % kicks in at only 28,000. Social security income is taxed same as federal.
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retired@50
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Re: Avoid CA taxes during retirement

Post by retired@50 »

boglesmind wrote: Sun May 15, 2022 2:00 pm 5. CA has prop 13 limit on property taxes. We pay roughly 1% on assessed value + parcel taxes not based on assessed value and the toal comes to ~1.25% of assessed value. Assesed value doesn't increase more then 2% a year. Friends in Austin, Dallas etc, for example, pay far more in property taxes (2+% of assessed value which increases every year, no limit)

Boglesmind
However, your friends in Texas also pay far less in state income taxes, in fact, it's zero in Texas.

This is just another example of... Well, they have to get the money to run the state from somewhere!

Sales tax
Income tax
Property tax
Luxury tax
etc.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
WestCoastPhan
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Re: Avoid CA taxes during retirement

Post by WestCoastPhan »

When it comes to property taxes, what matters to me is the actual dollars paid, not the rate. By way of example, if a 2,500 sf house on a 1/4 acre in California costs $2 million and the owner has to pay $20,000 per year in property taxes (rate of 1%) and the same house in Texas costs $800,000 and the homeowner there pays $16,000 in property taxes (rate of 2%) . . . isn't the Texas homeowner better off in terms of property taxes, despite paying a higher rate?
Dyloot
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Re: Avoid CA taxes during retirement

Post by Dyloot »

WestCoastPhan wrote: Sun May 15, 2022 10:40 pm When it comes to property taxes, what matters to me is the actual dollars paid, not the rate. By way of example, if a 2,500 sf house on a 1/4 acre in California costs $2 million and the owner has to pay $20,000 per year in property taxes (rate of 1%) and the same house in Texas costs $800,000 and the homeowner there pays $16,000 in property taxes (rate of 2%) . . . isn't the Texas homeowner better off in terms of property taxes, despite paying a higher rate?
Of course.

The nuance you may be missing is that California property owners have Prop 13 protections during their ownership of the home and the property owner in Texas does not. If in 20 years the Texas property value has increased to $4 million and the California property has increased to $6 million it will be the Texas property owner who theoretically is paying more property taxes.
RetiredAL
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Re: Avoid CA taxes during retirement

Post by RetiredAL »

hammond wrote: Sun May 15, 2022 10:33 am Watching this:
https://youtu.be/x2shSiKmYRw

I plan to have 2-3m in VOO for potential early retirement. And annual spending is about 80-100k. So I think if I am smart about it I don’t have to pay any federal taxes (assuming no w2 income).

What is the math for CA taxes? I like CA and see myself retrieving here (but who knows). Is there a way I can pay 0 in state taxes (capital gains and overall).
Our gross last year was $100,000. MFJ, standard deductions. 1/2 was SS, 1/2 was IRA withdrawals.

Our CA Income tax was $72. The biggest reason for the low tax amount is that CA does not tax SS. Thus our CA income subject to CA taxes was only $50,000.
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Re: Avoid CA taxes during retirement

Post by boglesmind »

retired@50 wrote: Sun May 15, 2022 8:11 pm
boglesmind wrote: Sun May 15, 2022 2:00 pm 5. CA has prop 13 limit on property taxes. We pay roughly 1% on assessed value + parcel taxes not based on assessed value and the toal comes to ~1.25% of assessed value. Assesed value doesn't increase more then 2% a year. Friends in Austin, Dallas etc, for example, pay far more in property taxes (2+% of assessed value which increases every year, no limit)

Boglesmind
However, your friends in Texas also pay far less in state income taxes, in fact, it's zero in Texas.

This is just another example of... Well, they have to get the money to run the state from somewhere!

Sales tax
Income tax
Property tax
Luxury tax
etc.

Regards,
It's true that state govts have to get the money to run the state from somewhere. I was just pointing out CA taxes aren't bad at all, especially for retirees, even when compared to states with no state income tax. See RetiredAl's post above. Also, as Dyloot points out, Prop 13 restricts property tax increases to 2% a year and this is especially important for retirees.

Boglesmind
Marseille07
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Re: Avoid CA taxes during retirement

Post by Marseille07 »

Dyloot wrote: Sun May 15, 2022 11:08 pm Of course.

The nuance you may be missing is that California property owners have Prop 13 protections during their ownership of the home and the property owner in Texas does not. If in 20 years the Texas property value has increased to $4 million and the California property has increased to $6 million it will be the Texas property owner who theoretically is paying more property taxes.
Well, that's a big if. I'm sure you realize that prop taxes are part of home price appreciation (i.e. Texas homes won't appreciate as much).
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Re: Avoid CA taxes during retirement

Post by Monsterflockster »

hammond wrote: Sun May 15, 2022 10:33 am Watching this:
https://youtu.be/x2shSiKmYRw

I plan to have 2-3m in VOO for potential early retirement. And annual spending is about 80-100k. So I think if I am smart about it I don’t have to pay any federal taxes (assuming no w2 income).

What is the math for CA taxes? I like CA and see myself retrieving here (but who knows). Is there a way I can pay 0 in state taxes (capital gains and overall).
Only thing I can think of is to live on the Nevada side of Lake Tahoe. 😁
boglesmind
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Re: Avoid CA taxes during retirement

Post by boglesmind »

WestCoastPhan wrote: Sun May 15, 2022 10:40 pm When it comes to property taxes, what matters to me is the actual dollars paid, not the rate. By way of example, if a 2,500 sf house on a 1/4 acre in California costs $2 million and the owner has to pay $20,000 per year in property taxes (rate of 1%) and the same house in Texas costs $800,000 and the homeowner there pays $16,000 in property taxes (rate of 2%) . . . isn't the Texas homeowner better off in terms of property taxes, despite paying a higher rate?
My Texas friends' property taxes (absolute amount) used to be 1/3rd of ours and now it's 2/3rd of ours in just about 10 years. And Texas rates are increasing at a faster rate since Prop 13 limits CA property tax increases to 2% a year. Most of the retirees (especially the ones who bought their CA homes 10+ years ago) are not paying taxes on resale value of $2 million -- home's assessed value under Prop 13 is much lower, about half or less.

Anyway, this is not about Texas vs. CA. I just picked a state without state income taxes to show that CA taxes in retirement (for most folks) are not bad because (a) social security income is fully exempt and (b) Prop 13 limits property tax assessed values and taxes to 2% max a year.

Boglesmind
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Re: Avoid CA taxes during retirement

Post by boglesmind »

Marseille07 wrote: Mon May 16, 2022 12:17 am
Dyloot wrote: Sun May 15, 2022 11:08 pm Of course.

The nuance you may be missing is that California property owners have Prop 13 protections during their ownership of the home and the property owner in Texas does not. If in 20 years the Texas property value has increased to $4 million and the California property has increased to $6 million it will be the Texas property owner who theoretically is paying more property taxes.
Well, that's a big if. I'm sure you realize that prop taxes are part of home price appreciation (i.e. Texas homes won't appreciate as much).
Homes in Austin and Dallas suburbs are on a tear for the last 10 years or so. Our friends prop taxes in those areas went from 1/3rd to 2/3rd of our CA property taxes. CA Proposition 13 limits increases in assessed values to 2% max a year. There is no such cap in Texas. Also, most school districts waive some of the parcel taxes for home owners 65 and above - one has to apply for it and certify that the homes are owner occupied to benefit from this.
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retired@50
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Re: Avoid CA taxes during retirement

Post by retired@50 »

boglesmind wrote: Mon May 16, 2022 12:15 am ... I was just pointing out CA taxes aren't bad at all, especially for retirees, even when compared to states with no state income tax.
I disagree. I'm a retiree, but not on Social Security and not a homeowner.

I could cut my annual income tax bill nearly in half by moving to Nevada, or Texas, etc.

In 2021 my Federal income tax was $1,560 and my CA income tax was $1,392

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Californiastate
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Re: Avoid CA taxes during retirement

Post by Californiastate »

retired@50 wrote: Mon May 16, 2022 9:12 am
boglesmind wrote: Mon May 16, 2022 12:15 am ... I was just pointing out CA taxes aren't bad at all, especially for retirees, even when compared to states with no state income tax.
I disagree. I'm a retiree, but not on Social Security and not a homeowner.

I could cut my annual income tax bill nearly in half by moving to Nevada, or Texas, etc.

In 2021 my Federal income tax was $1,560 and my CA income tax was $1,392

Regards,
You are correct. You aren't able to take advantage of the tax breaks in your current position. You also could save fuel taxes by moving to Nevada also.
asap
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Re: Avoid CA taxes during retirement

Post by asap »

retired@50 wrote: Mon May 16, 2022 9:12 am
boglesmind wrote: Mon May 16, 2022 12:15 am ... I was just pointing out CA taxes aren't bad at all, especially for retirees, even when compared to states with no state income tax.
I disagree. I'm a retiree, but not on Social Security and not a homeowner.

I could cut my annual income tax bill nearly in half by moving to Nevada, or Texas, etc.

In 2021 my Federal income tax was $1,560 and my CA income tax was $1,392

Regards,
Did you get any subsidy from Covered California? ACA is better in California than Nevada or Texas.
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Re: Avoid CA taxes during retirement

Post by retired@50 »

asap wrote: Mon May 16, 2022 9:34 am
retired@50 wrote: Mon May 16, 2022 9:12 am
boglesmind wrote: Mon May 16, 2022 12:15 am ... I was just pointing out CA taxes aren't bad at all, especially for retirees, even when compared to states with no state income tax.
I disagree. I'm a retiree, but not on Social Security and not a homeowner.

I could cut my annual income tax bill nearly in half by moving to Nevada, or Texas, etc.

In 2021 my Federal income tax was $1,560 and my CA income tax was $1,392

Regards,
Did you get any subsidy from Covered California? ACA is better in California than Nevada or Texas.
The state of California kicked in $36 toward my 2021 medical premiums. The remainder of my ACA subsidy comes from the Federal government. Are you saying the Federal portion of the subsidy would be different if I lived in another state? That's not how I understand the rules.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Re: Avoid CA taxes during retirement

Post by quantAndHold »

Our CA income tax in 2021 was $156, but we got $600 in kickbacks because of the state budget surplus, so the net was negative. I expect it to be negative this year, too. The only reason we paid any state tax at all was because the stock market was on a tear, and we had some gains. In 2020, our tax was $0.

We also pay $4k/year in property taxes, on a home worth $2m.

Could we live more cheaply somewhere else? Probably a bit. But we like it here, and for a retiree with a typical retiree’s income sources, the difference in cost isn’t enough to really make a difference to us.

People keep banging on about taxes and gas prices, but biggest thing for most retirees is usually housing costs. Everyone either has owned for long enough that they’re sitting on a pile of equity, or else they have rent or mortgage costs that are through the roof. That equity could be freed up, or the rent could be lower, if they moved to somewhere with cheaper housing.
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Re: Avoid CA taxes during retirement

Post by fareastwarriors »

retired@50 wrote: Mon May 16, 2022 9:12 am
boglesmind wrote: Mon May 16, 2022 12:15 am ... I was just pointing out CA taxes aren't bad at all, especially for retirees, even when compared to states with no state income tax.
I disagree. I'm a retiree, but not on Social Security and not a homeowner.

I could cut my annual income tax bill nearly in half by moving to Nevada, or Texas, etc.

In 2021 my Federal income tax was $1,560 and my CA income tax was $1,392

Regards,
He did mention social security and/or homeowner... If neither situation applies to you, then it makes sense you would pay more in state taxes than a "typical" retiree with mostly (if not all SS).
WestCoastPhan
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Re: Avoid CA taxes during retirement

Post by WestCoastPhan »

boglesmind wrote: Mon May 16, 2022 12:25 am
WestCoastPhan wrote: Sun May 15, 2022 10:40 pm When it comes to property taxes, what matters to me is the actual dollars paid, not the rate. By way of example, if a 2,500 sf house on a 1/4 acre in California costs $2 million and the owner has to pay $20,000 per year in property taxes (rate of 1%) and the same house in Texas costs $800,000 and the homeowner there pays $16,000 in property taxes (rate of 2%) . . . isn't the Texas homeowner better off in terms of property taxes, despite paying a higher rate?
My Texas friends' property taxes (absolute amount) used to be 1/3rd of ours and now it's 2/3rd of ours in just about 10 years. And Texas rates are increasing at a faster rate since Prop 13 limits CA property tax increases to 2% a year. Most of the retirees (especially the ones who bought their CA homes 10+ years ago) are not paying taxes on resale value of $2 million -- home's assessed value under Prop 13 is much lower, about half or less.

Anyway, this is not about Texas vs. CA. I just picked a state without state income taxes to show that CA taxes in retirement (for most folks) are not bad because (a) social security income is fully exempt and (b) Prop 13 limits property tax assessed values and taxes to 2% max a year.

Boglesmind
I don't disagree. For retirees at, say, $100k in income (especially with significant social security income), who have been in their homes for a long time, it can be great. I have elderly neighbors who have been in their house for almost 60 years. Their property tax rate is less than 0.1% of the current value.

But my original comment was in response to your claim that your friends in Texas pay "far more" because the rate is higher. I was just pointing out that the rate isn't what matters -- as you have confirmed by pointing out that your Texas' friends currently pay 1/3 less in property taxes than you do. I'm a California homeowner; I pay a far lower property tax rate than my siblings in other states. But I pay more in property taxes.
A-Commoner
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Re: Avoid CA taxes during retirement

Post by A-Commoner »

WestCoastPhan wrote: Mon May 16, 2022 11:55 am
boglesmind wrote: Mon May 16, 2022 12:25 am
WestCoastPhan wrote: Sun May 15, 2022 10:40 pm When it comes to property taxes, what matters to me is the actual dollars paid, not the rate. By way of example, if a 2,500 sf house on a 1/4 acre in California costs $2 million and the owner has to pay $20,000 per year in property taxes (rate of 1%) and the same house in Texas costs $800,000 and the homeowner there pays $16,000 in property taxes (rate of 2%) . . . isn't the Texas homeowner better off in terms of property taxes, despite paying a higher rate?
My Texas friends' property taxes (absolute amount) used to be 1/3rd of ours and now it's 2/3rd of ours in just about 10 years. And Texas rates are increasing at a faster rate since Prop 13 limits CA property tax increases to 2% a year. Most of the retirees (especially the ones who bought their CA homes 10+ years ago) are not paying taxes on resale value of $2 million -- home's assessed value under Prop 13 is much lower, about half or less.

Anyway, this is not about Texas vs. CA. I just picked a state without state income taxes to show that CA taxes in retirement (for most folks) are not bad because (a) social security income is fully exempt and (b) Prop 13 limits property tax assessed values and taxes to 2% max a year.

Boglesmind
I don't disagree. For retirees at, say, $100k in income (especially with significant social security income), who have been in their homes for a long time, it can be great. I have elderly neighbors who have been in their house for almost 60 years. Their property tax rate is less than 0.1% of the current value.

But my original comment was in response to your claim that your friends in Texas pay "far more" because the rate is higher. I was just pointing out that the rate isn't what matters -- as you have confirmed by pointing out that your Texas' friends currently pay 1/3 less in property taxes than you do. I'm a California homeowner; I pay a far lower property tax rate than my siblings in other states. But I pay more in property taxes.
Would you rather have the value of your CA house cut in half so you’ll be paying less in property tax?
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Re: Avoid CA taxes during retirement

Post by Ron Ronnerson »

hammond wrote: Sun May 15, 2022 10:33 am
What is the math for CA taxes? I like CA and see myself retrieving here (but who knows). Is there a way I can pay 0 in state taxes (capital gains and overall).
It is possible but it all depends on your particulars. California doesn’t tax social security. There are also deductions and exemptions which can lower your income tax liability. Filing status (and number of dependents) makes a difference too.

If someone is married, has social security covering a good portion of their expenses, and has a combination of account types from which to withdraw (taxable, deferred, Roth), they could be in a decent position to spend $80k-$100k and have no California income tax liability.

I am still working and had a gross income of around $117k last year. My California income tax liability was $0 and I received $1100 in state stimulus funds along with a state subsidy toward health insurance. I had items that lowered my taxable income such as contributions to retirement accounts and deducting mortgage interest and property taxes. Similarly, for a retiree, the portion of expenses covered by social security or money taken out of a Roth account wouldn’t really “count” as income.

You need to look at all types of taxes, though. Based on the brief post above, it’s not clear to me whether moving elsewhere would help lower your costs or not. More details about your situation (such as filing status, whether you own a home, how much social security you might get, and what types of accounts you plan to withdraw from) would help frame things more.
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hammond
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Re: Avoid CA taxes during retirement

Post by hammond »

RetiredAL wrote: Sun May 15, 2022 11:12 pm
hammond wrote: Sun May 15, 2022 10:33 am Watching this:
https://youtu.be/x2shSiKmYRw

I plan to have 2-3m in VOO for potential early retirement. And annual spending is about 80-100k. So I think if I am smart about it I don’t have to pay any federal taxes (assuming no w2 income).

What is the math for CA taxes? I like CA and see myself retrieving here (but who knows). Is there a way I can pay 0 in state taxes (capital gains and overall).
Our gross last year was $100,000. MFJ, standard deductions. 1/2 was SS, 1/2 was IRA withdrawals.

Our CA Income tax was $72. The biggest reason for the low tax amount is that CA does not tax SS. Thus our CA income subject to CA taxes was only $50,000.
Which IRA? Roth IRA is not taxed in CA
tj
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Re: Avoid CA taxes during retirement

Post by tj »

hammond wrote: Sun May 22, 2022 8:12 pm
RetiredAL wrote: Sun May 15, 2022 11:12 pm
hammond wrote: Sun May 15, 2022 10:33 am Watching this:
https://youtu.be/x2shSiKmYRw

I plan to have 2-3m in VOO for potential early retirement. And annual spending is about 80-100k. So I think if I am smart about it I don’t have to pay any federal taxes (assuming no w2 income).

What is the math for CA taxes? I like CA and see myself retrieving here (but who knows). Is there a way I can pay 0 in state taxes (capital gains and overall).
Our gross last year was $100,000. MFJ, standard deductions. 1/2 was SS, 1/2 was IRA withdrawals.

Our CA Income tax was $72. The biggest reason for the low tax amount is that CA does not tax SS. Thus our CA income subject to CA taxes was only $50,000.
Which IRA? Roth IRA is not taxed in CA
One would assume traditional as Roth IRA distributions are not taxable transactions.
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celia
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Re: Avoid CA taxes during retirement

Post by celia »

boglesmind wrote: Mon May 16, 2022 12:32 am CA Proposition 13 limits increases in assessed values to 2% max a year. There is no such cap in Texas. Also, most school districts waive some of the parcel taxes for home owners 65 and above - one has to apply for it and certify that the homes are owner occupied to benefit from this.
I’m not sure which state you are referring to for the bolded, but this is not true in CA, as the property taxes are only deferred until later or the house is sold. And there are other eligibilty requirements.

https://sco.ca.gov/ardtax_prop_tax_postponement.html
RetiredAL
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Re: Avoid CA taxes during retirement

Post by RetiredAL »

hammond wrote: Sun May 22, 2022 8:12 pm
RetiredAL wrote: Sun May 15, 2022 11:12 pm
hammond wrote: Sun May 15, 2022 10:33 am Watching this:
https://youtu.be/x2shSiKmYRw

I plan to have 2-3m in VOO for potential early retirement. And annual spending is about 80-100k. So I think if I am smart about it I don’t have to pay any federal taxes (assuming no w2 income).

What is the math for CA taxes? I like CA and see myself retrieving here (but who knows). Is there a way I can pay 0 in state taxes (capital gains and overall).
Our gross last year was $100,000. MFJ, standard deductions. 1/2 was SS, 1/2 was IRA withdrawals.

Our CA Income tax was $72. The biggest reason for the low tax amount is that CA does not tax SS. Thus our CA income subject to CA taxes was only $50,000.
Which IRA? Roth IRA is not taxed in CA
Traditional IRA -- A $50,000 withdrawal, $20,000 for spending, $30,000 for conversion to Roth. If I had held the conversion to $20,000, our CA tax would have been zero. I took my retirement as a lump sum and rolled it to an IRA.

We each do have a substantial Roth and they will be our last to use, if it's ever. Most likely our kids will inherit the Roths intact.
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Re: Avoid CA taxes during retirement

Post by RetiredAL »

quantAndHold wrote: Mon May 16, 2022 10:00 am Our CA income tax in 2021 was $156, but we got $600 in kickbacks because of the state budget surplus, so the net was negative.
We too got the $600 state payment, as it was based on State AGI and SS is excluded from State AGI.

If it had been based on Fed AGI, we would have be just above the cut-off limit, a result of my Roth Conversions onto top of our SS and spending withdrawal from my IRA.
boglesmind
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Re: Avoid CA taxes during retirement

Post by boglesmind »

celia wrote: Sun May 22, 2022 8:57 pm
boglesmind wrote: Mon May 16, 2022 12:32 am CA Proposition 13 limits increases in assessed values to 2% max a year. There is no such cap in Texas. Also, most school districts waive some of the parcel taxes for home owners 65 and above - one has to apply for it and certify that the homes are owner occupied to benefit from this.
I’m not sure which state you are referring to for the bolded, but this is not true in CA, as the property taxes are only deferred until later or the house is sold. And there are other eligibilty requirements.

https://sco.ca.gov/ardtax_prop_tax_postponement.html
What I wrote is true in California. My neighbors applied and got parcel tax waiver once they crossed 65 and reside in their own home. Parcel tax waiver is not the same as full property tax waiver or deferral. In addition to the regular property taxes (with prop 13 restrictions), school districts levy parcel taxes that are per parcel and don't depend on assessed value. One can get relief from these school-levied parcel taxes that are part of property taxes if they are 65 or older, reside in their parcel(home). There are also exemptions for those who are on disability, or receiving SSI etc. Depends on each school district and what measure passed when.

See Fremont Union School Dist
California homeowners 65 and older should check their property tax bills and make sure they are getting any senior exemptions on school parcel taxes to which they are entitled. These exemptions could reduce their tax bills by hundreds of dollars, or more than $1,000 in some wealthier districts.
See SFGate:Homeowners over 65 can often get property tax exemptions

Some more examples:
County of Santa Clara: City and Special District Parcel Tax Exemptions
Campbell Union Schools
Parcel Tax Exemptions
Loma Prieta Joint Union School District
Santa Cruz Schools
...

Boglesmind
tj
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Re: Avoid CA taxes during retirement

Post by tj »

boglesmind wrote: Sun May 22, 2022 11:46 pm
celia wrote: Sun May 22, 2022 8:57 pm
boglesmind wrote: Mon May 16, 2022 12:32 am CA Proposition 13 limits increases in assessed values to 2% max a year. There is no such cap in Texas. Also, most school districts waive some of the parcel taxes for home owners 65 and above - one has to apply for it and certify that the homes are owner occupied to benefit from this.
I’m not sure which state you are referring to for the bolded, but this is not true in CA, as the property taxes are only deferred until later or the house is sold. And there are other eligibilty requirements.

https://sco.ca.gov/ardtax_prop_tax_postponement.html
What I wrote is true in California. My neighbors applied and got parcel tax waiver once they crossed 65 and reside in their own home. Parcel tax waiver is not the same as full property tax waiver or deferral. In addition to the regular property taxes (with prop 13 restrictions), school districts levy parcel taxes that are per parcel and don't depend on assessed value. One can get relief from these school-levied parcel taxes that are part of property taxes if they are 65 or older, reside in their parcel(home). There are also exemptions for those who are on disability, or receiving SSI etc. Depends on each school district and what measure passed when.

See Fremont Union School Dist
California homeowners 65 and older should check their property tax bills and make sure they are getting any senior exemptions on school parcel taxes to which they are entitled. These exemptions could reduce their tax bills by hundreds of dollars, or more than $1,000 in some wealthier districts.
See SFGate:Homeowners over 65 can often get property tax exemptions

Some more examples:
County of Santa Clara: City and Special District Parcel Tax Exemptions
Campbell Union Schools
Parcel Tax Exemptions
Loma Prieta Joint Union School District
Santa Cruz Schools
...

Boglesmind
This is obviously going to vary by county. There is no such exemption in Los Angeles County, Orange County or Riverside County that I'm aware of.
RetiredAL
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Re: Avoid CA taxes during retirement

Post by RetiredAL »

boglesmind wrote: Sun May 22, 2022 11:46 pm
celia wrote: Sun May 22, 2022 8:57 pm
boglesmind wrote: Mon May 16, 2022 12:32 am CA Proposition 13 limits increases in assessed values to 2% max a year. There is no such cap in Texas. Also, most school districts waive some of the parcel taxes for home owners 65 and above - one has to apply for it and certify that the homes are owner occupied to benefit from this.
I’m not sure which state you are referring to for the bolded, but this is not true in CA, as the property taxes are only deferred until later or the house is sold. And there are other eligibilty requirements.

https://sco.ca.gov/ardtax_prop_tax_postponement.html
What I wrote is true in California. My neighbors applied and got parcel tax waiver once they crossed 65 and reside in their own home. Parcel tax waiver is not the same as full property tax waiver or deferral. In addition to the regular property taxes (with prop 13 restrictions), school districts levy parcel taxes that are per parcel and don't depend on assessed value. One can get relief from these school-levied parcel taxes that are part of property taxes if they are 65 or older, reside in their parcel(home). There are also exemptions for those who are on disability, or receiving SSI etc. Depends on each school district and what measure passed when.

See Fremont Union School Dist
California homeowners 65 and older should check their property tax bills and make sure they are getting any senior exemptions on school parcel taxes to which they are entitled. These exemptions could reduce their tax bills by hundreds of dollars, or more than $1,000 in some wealthier districts.
See SFGate:Homeowners over 65 can often get property tax exemptions

Some more examples:
County of Santa Clara: City and Special District Parcel Tax Exemptions
Campbell Union Schools
Parcel Tax Exemptions
Loma Prieta Joint Union School District
Santa Cruz Schools
...

Boglesmind
"more than $1000" is very misleading.

I'm in the Campbell Union School Dist and the parcel taxes eligible for senior exclusion is $134. Although we qualify, we will never apply.
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celia
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Re: Avoid CA taxes during retirement

Post by celia »

tj wrote: Mon May 23, 2022 12:10 am
boglesmind wrote: Sun May 22, 2022 11:46 pm What I wrote is true in California. My neighbors applied and got parcel tax waiver once they crossed 65 and reside in their own home. Parcel tax waiver is not the same as full property tax waiver or deferral. In addition to the regular property taxes (with prop 13 restrictions), school districts levy parcel taxes that are per parcel and don't depend on assessed value. One can get relief from these school-levied parcel taxes that are part of property taxes if they are 65 or older, reside in their parcel(home). There are also exemptions for those who are on disability, or receiving SSI etc. Depends on each school district and what measure passed when.

See Fremont Union School Dist
California homeowners 65 and older should check their property tax bills and make sure they are getting any senior exemptions on school parcel taxes to which they are entitled. These exemptions could reduce their tax bills by hundreds of dollars, or more than $1,000 in some wealthier districts.
See SFGate:Homeowners over 65 can often get property tax exemptions
. . .
This is obviously going to vary by county. There is no such exemption in Los Angeles County, Orange County or Riverside County that I'm aware of.
More specifically, it depends what school district you live in. It appears to apply to only a few school districts in the northern part of the state.

And since the stated purpose of these “parcel taxes” is to help pass Measures for schools while exempting some people (who file for an exemption), it somehow seems unfair to pass a new tax that will only apply to some people, but not others. For example, we live in an upscale neighborhood where maybe a third of the homeowners are over 65. Our neighborhood also also has a high voter turn-out. So we can pass a measure that will apply to others without worrying about it applying to us (seniors)?
boglesmind
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Re: Avoid CA taxes during retirement

Post by boglesmind »

celia wrote: Mon May 23, 2022 12:37 am
tj wrote: Mon May 23, 2022 12:10 am
boglesmind wrote: Sun May 22, 2022 11:46 pm What I wrote is true in California. My neighbors applied and got parcel tax waiver once they crossed 65 and reside in their own home. Parcel tax waiver is not the same as full property tax waiver or deferral. In addition to the regular property taxes (with prop 13 restrictions), school districts levy parcel taxes that are per parcel and don't depend on assessed value. One can get relief from these school-levied parcel taxes that are part of property taxes if they are 65 or older, reside in their parcel(home). There are also exemptions for those who are on disability, or receiving SSI etc. Depends on each school district and what measure passed when.

See Fremont Union School Dist
California homeowners 65 and older should check their property tax bills and make sure they are getting any senior exemptions on school parcel taxes to which they are entitled. These exemptions could reduce their tax bills by hundreds of dollars, or more than $1,000 in some wealthier districts.
See SFGate:Homeowners over 65 can often get property tax exemptions
. . .
This is obviously going to vary by county. There is no such exemption in Los Angeles County, Orange County or Riverside County that I'm aware of.
More specifically, it depends what school district you live in. It appears to apply to only a few school districts in the northern part of the state.

And since the stated purpose of these “parcel taxes” is to help pass Measures for schools while exempting some people (who file for an exemption), it somehow seems unfair to pass a new tax that will only apply to some people, but not others. For example, we live in an upscale neighborhood where maybe a third of the homeowners are over 65. Our neighborhood also also has a high voter turn-out. So we can pass a measure that will apply to others without worrying about it applying to us (seniors)?
1. These apply to many districts. I did a google search and lot more districts showed up and I didn't want to provide links to all of them. Folks can google for themselves.
2. Fairness in taxation is not an actionable issue for this forum. OP's question was about lowering CA taxes in retirement.
3. Further, these are not automatic exemptions and one has to apply for them. They are not widely known and not every one applies - example RetiredAL above.

Boglesmind
Last edited by boglesmind on Mon May 23, 2022 1:22 am, edited 1 time in total.
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celia
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Re: Avoid CA taxes during retirement

Post by celia »

Update: here is a list of agencies that have a parcel tax in Los Angeles County. There are very few school districts listed:
https://auditor.lacounty.gov/wp-content ... counts.pdf

My search didn’t find any parcel tax areas in Orange or Riverside County.

Are only school district parcel taxes able to be exempted?
boglesmind
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Re: Avoid CA taxes during retirement

Post by boglesmind »

tj wrote: Mon May 23, 2022 12:10 am
boglesmind wrote: Sun May 22, 2022 11:46 pm
celia wrote: Sun May 22, 2022 8:57 pm
boglesmind wrote: Mon May 16, 2022 12:32 am CA Proposition 13 limits increases in assessed values to 2% max a year. There is no such cap in Texas. Also, most school districts waive some of the parcel taxes for home owners 65 and above - one has to apply for it and certify that the homes are owner occupied to benefit from this.
I’m not sure which state you are referring to for the bolded, but this is not true in CA, as the property taxes are only deferred until later or the house is sold. And there are other eligibilty requirements.

https://sco.ca.gov/ardtax_prop_tax_postponement.html
What I wrote is true in California. My neighbors applied and got parcel tax waiver once they crossed 65 and reside in their own home. Parcel tax waiver is not the same as full property tax waiver or deferral. In addition to the regular property taxes (with prop 13 restrictions), school districts levy parcel taxes that are per parcel and don't depend on assessed value. One can get relief from these school-levied parcel taxes that are part of property taxes if they are 65 or older, reside in their parcel(home). There are also exemptions for those who are on disability, or receiving SSI etc. Depends on each school district and what measure passed when.

See Fremont Union School Dist
California homeowners 65 and older should check their property tax bills and make sure they are getting any senior exemptions on school parcel taxes to which they are entitled. These exemptions could reduce their tax bills by hundreds of dollars, or more than $1,000 in some wealthier districts.
See SFGate:Homeowners over 65 can often get property tax exemptions

Some more examples:
County of Santa Clara: City and Special District Parcel Tax Exemptions
Campbell Union Schools
Parcel Tax Exemptions
Loma Prieta Joint Union School District
Santa Cruz Schools
...

Boglesmind
This is obviously going to vary by county. There is no such exemption in Los Angeles County, Orange County or Riverside County that I'm aware of.
I did a Google search and Los Angeles county school districts show up.
CALIFORNIA ASSEMBLY BILL NO. 2458/SCHOOL DISTRICT PARCEL TAX EXEMPTION
Clicked on the first school in the above list LITTLE LAKE CITY SCHOOL DISTRICT and it shows $48 parcel tax exemption. You have to apply for it and you can choose not to. Next one on the list Arcadia school district does too. The third on on the list La Cañada Unified School District does too. I stopped searching! And, no further responses to this thread!

Boglesmind
calwatch
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Re: Avoid CA taxes during retirement

Post by calwatch »

There are also other parcel taxes which can be exempted on retirement, based on income. One is the stormwater tax in LA County, which has a low income criteria of $66,250 for a single and $75,700 for a couple (https://safecleanwaterla.org/wp-content ... 210621.pdf). Marin County has a wildfire tax and a radio communications tax which have a senior exemption for those earning less than $102,450. If it's based on gross income, then Roth IRA withdrawals are exempted from counting.
Ependytis
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Re: Avoid CA taxes during retirement

Post by Ependytis »

Monsterflockster wrote: Mon May 16, 2022 12:19 am
hammond wrote: Sun May 15, 2022 10:33 am Watching this:
https://youtu.be/x2shSiKmYRw

I plan to have 2-3m in VOO for potential early retirement. And annual spending is about 80-100k. So I think if I am smart about it I don’t have to pay any federal taxes (assuming no w2 income).

What is the math for CA taxes? I like CA and see myself retrieving here (but who knows). Is there a way I can pay 0 in state taxes (capital gains and overall).
Only thing I can think of is to live on the Nevada side of Lake Tahoe. 😁
My uncle did this. Him and his wife chose to live on Lake Tahoe in Zephyr Cove. Therefore they paid no California taxes.
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zincTwo
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Re: Avoid CA taxes during retirement

Post by zincTwo »

CA also taxes all gains in HSA account (treats it like a normal taxable account). (same law exists in NJ too).
Wannaretireearly
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Re: Avoid CA taxes during retirement

Post by Wannaretireearly »

I paid a sum total of around $40k in CA taxes. While my kids are here I don’t have much choice. I am all ears once kids are done with school, and I don’t have to be here for more than 6 months a year.

Fwiw, there is no other place I would want to be in fall/winter. That’s only 3-4 months (non taxable!)
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
RetiredAL
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Re: Avoid CA taxes during retirement

Post by RetiredAL »

celia wrote: Mon May 23, 2022 12:37 am
tj wrote: Mon May 23, 2022 12:10 am
boglesmind wrote: Sun May 22, 2022 11:46 pm What I wrote is true in California. My neighbors applied and got parcel tax waiver once they crossed 65 and reside in their own home. Parcel tax waiver is not the same as full property tax waiver or deferral. In addition to the regular property taxes (with prop 13 restrictions), school districts levy parcel taxes that are per parcel and don't depend on assessed value. One can get relief from these school-levied parcel taxes that are part of property taxes if they are 65 or older, reside in their parcel(home). There are also exemptions for those who are on disability, or receiving SSI etc. Depends on each school district and what measure passed when.

See Fremont Union School Dist
California homeowners 65 and older should check their property tax bills and make sure they are getting any senior exemptions on school parcel taxes to which they are entitled. These exemptions could reduce their tax bills by hundreds of dollars, or more than $1,000 in some wealthier districts.
See SFGate:Homeowners over 65 can often get property tax exemptions
. . .
This is obviously going to vary by county. There is no such exemption in Los Angeles County, Orange County or Riverside County that I'm aware of.
More specifically, it depends what school district you live in. It appears to apply to only a few school districts in the northern part of the state.

And since the stated purpose of these “parcel taxes” is to help pass Measures for schools while exempting some people (who file for an exemption), it somehow seems unfair to pass a new tax that will only apply to some people, but not others. For example, we live in an upscale neighborhood where maybe a third of the homeowners are over 65. Our neighborhood also also has a high voter turn-out. So we can pass a measure that will apply to others without worrying about it applying to us (seniors)?
The concept behind these school exemptions is to not force a tax onto a limited income senior who cannot afford the money. I find it disingenuous for someone affluent to vote YES when they have no intention to pay. I'm not accusing anyone, but sharing why I choose to pay it when I don't absolutely have to.
Last edited by RetiredAL on Mon May 23, 2022 6:58 pm, edited 1 time in total.
tj
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Re: Avoid CA taxes during retirement

Post by tj »

Wannaretireearly wrote: Mon May 23, 2022 6:46 pm I paid a sum total of around $40k in CA taxes. While my kids are here I don’t have much choice. I am all ears once kids are done with school, and I don’t have to be here for more than 6 months a year.

Fwiw, there is no other place I would want to be in fall/winter. That’s only 3-4 months (non taxable!)
Not taxable? Sounds like you'd be a part year resident.
Wannaretireearly
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Re: Avoid CA taxes during retirement

Post by Wannaretireearly »

tj wrote: Mon May 23, 2022 6:56 pm
Wannaretireearly wrote: Mon May 23, 2022 6:46 pm I paid a sum total of around $40k in CA taxes. While my kids are here I don’t have much choice. I am all ears once kids are done with school, and I don’t have to be here for more than 6 months a year.

Fwiw, there is no other place I would want to be in fall/winter. That’s only 3-4 months (non taxable!)
Not taxable? Sounds like you'd be a part year resident.
Hmm. If your a part year resident, under 6 months, you still have to pay CA taxes? If so, that’s news to me…
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
tj
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Re: Avoid CA taxes during retirement

Post by tj »

Wannaretireearly wrote: Mon May 23, 2022 9:43 pm
tj wrote: Mon May 23, 2022 6:56 pm
Wannaretireearly wrote: Mon May 23, 2022 6:46 pm I paid a sum total of around $40k in CA taxes. While my kids are here I don’t have much choice. I am all ears once kids are done with school, and I don’t have to be here for more than 6 months a year.

Fwiw, there is no other place I would want to be in fall/winter. That’s only 3-4 months (non taxable!)
Not taxable? Sounds like you'd be a part year resident.
Hmm. If your a part year resident, under 6 months, you still have to pay CA taxes? If so, that’s news to me…
It seems pretty clear cut:
https://www.ftb.ca.gov/file/personal/re ... ident.html
fareastwarriors
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Re: Avoid CA taxes during retirement

Post by fareastwarriors »

Wannaretireearly wrote: Mon May 23, 2022 6:46 pm I paid a sum total of around $40k in CA taxes. While my kids are here I don’t have much choice. I am all ears once kids are done with school, and I don’t have to be here for more than 6 months a year.

Fwiw, there is no other place I would want to be in fall/winter. That’s only 3-4 months (non taxable!)
40k in CA income taxes means you have pretty high income. So congrats! :sharebeer
And thank you for contributing to our state.
boglesmind
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Re: Avoid CA taxes during retirement

Post by boglesmind »

Wannaretireearly wrote: Mon May 23, 2022 6:46 pm I paid a sum total of around $40k in CA taxes. While my kids are here I don’t have much choice. I am all ears once kids are done with school, and I don’t have to be here for more than 6 months a year.

Fwiw, there is no other place I would want to be in fall/winter. That’s only 3-4 months (non taxable!)
You'd want to be very careful. As others pointed out, California may consider you part-time resident and require you to pay CA income taxes based on the time spent here even if you were a resident of some other state and you establish domicile elsewhere.

Boglesmind
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