Marianela Collado, CPA and CFP with Tobias Financial Advisors, warned retirees against creating more state taxable income by keeping municipal bonds from a former resident state that would become taxable in the new resident state.
Furthermore, it is critical retirees understand the difference between a residence (where you live) and a domicile (where you intend to return), she said.
For example, Collado said, New York would be quick to challenge a change in domicile if retirees are just spending half the year in Florida and everything that is near and dear to them, such as doctors and charities, is back in the Empire State.
"When assisting clients with making a clean break from their current state of residency to their new location, it is critical to dot the I's and cross the T's and at least be prepared for a potential audit," she said. "If you're not careful, you could find yourself in a worse situation – taxed by two states."
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Real estate expenses. Real estate–related costs can be higher than expected, according to Collado. "In Florida, insurance is a biggie," she said. "Due to hurricanes, homeowner premiums could be in the thousands [of dollars]."
In fact, a recent report from the National Association of Insurance Commissioners showed Florida's average annual homeowner insurance premium is more than $2,000. (Click here to download the report.)
Furthermore, an apartment in a retirement community could be affordable, but the monthly homeowners association fee could be more than $1,000, Collado noted.
Watch out for other steep condo expenses, said Michele Clark, CFP and founder of Clark Hourly Financial Planning and Investment Management.