2011 RUNNING & TRAVEL ADVENTURES

 

   
 
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   DREAMING ABOUT THE RV LIFESTYLE?
Part 5: Home Base - Should You Sell Your House?

Change Your Legal Domicile?

TUESDAY, JANUARY 4

 
"It takes a lot of courage to release the familiar and seemingly secure, to embrace the new.
But there is no real security in what is no longer meaningful. There is more security
in the adventurous and exciting, for in movement there is life and in change there is power."
 
 ~ Alan Cohen
 
 

One of the biggest decisions you'll have to make if you want to travel extensively in an RV is whether to sell your "stick" house (or condo, mobile home, etc.) or end a lease in a rental unit and sell, give away, and/or store your possessions.

There are financial and other advantages to doing this, but it's a huge, scary step for most people and particularly difficult for folks who have strong ties to their communities.

Then there's the issue of where to establish a legal domicile if you travel and live in your RV full-time. Should you keep it in the same state where you've been living or change it to a state that might have more favorable tax and other financial consequences?

This entry discusses these issues.

WHAT ARE SOME CONSIDERATIONS RE: SELLING MY HOUSE TO LIVE FULL-TIME IN AN RV?

True full-time RVers do not have any stationary dwelling any more.

It's easier to make that transition if they've been renting than if they own property they want to sell, especially in this terribly depressed housing market. Some people like us would be full-timing now if we could sell our houses without taking a big financial hit.


Just waitin' for those leaves to come down so we can hit the road again . . .  (November, 2010)

About the only bright spot is if they can find suitable tenants to live in their house until they can recoup their equity in a few years; rental properties are commanding increasingly higher rates now than before since so many people are unemployed, have lost their homes to foreclosures, can't get housing loans because the standards are much stricter, or are simply fearful of making such a large financial commitment because of the risk of losing their jobs.

As much as Jim and I would like to sell our house or derive income from it while we're out of state, we have no desire to be absentee landlords -- for a variety of good reasons. For some other folks, it could be a great solution in this economic climate.

There are some advantages to having a house and going out for extended RV trips.

If you keep your house for a while you can ease into the full-time RV lifestyle to see whether it's "right" for you. I recommend a gradual approach to this full-timing stuff anyway. There is so much to learn about yourself and the whole full-time lifestyle that it's really risky to sell your house, sell/donate/store all of your belongings, and hit the road in an RV unless you've been doing it for long enough periods of time to have a good idea of what you're getting into.


The early December snow is pretty but we'd rather be in the sunny Arizona desert!  This year's
winter trip was delayed by Jim's unexpected meniscus surgery. We left a couple days after this. (2010)

I'm sure there are things that even Jim and I haven't considered yet, and we're about as close to living full-time as we can get while still owning a house.

When we sell it we'll have a myriad of decisions about what to sell, what to give away, and what to store. We don't know how long we'll want to live full time on the road. Should we store the things we keep in Roanoke or somewhere like Colorado or Texas, closer to the areas we most frequently visit? Should we keep our medical providers in Roanoke or choose new ones somewhere else? If so, where??


Early May, 2010: Jim gets the truck and Cameo ready for our five-month summer trip.
The peonies and bearded irises are just beginning to bloom. (Want a house in the Roanoke area??)

For some folks these decisions are easier than others. It just depends on their personal circumstances.

Selling a house to which you've become attached is hard enough. Leaving an entire community of neighbors, friends, co-workers, organizational ties, familiar places, and perhaps family members is even tougher on a lot of retirees and other folks who decide to hit the road in an RV full-time.

You have got to think realistically about your emotional ties to that area. What sounds like a grand adventure may be short-lived because you can't live without someone or something that you left behind, even if you plan to go back for visits.

It's another one of those things that you can't really know until you do it. It's only natural to feel some sense of loss and sadness initially, but most full-timers get over it pretty fast as a whole new world of exploration and opportunity opens up to them.

Then they start writing blogs and bragging to their family and friends about all the great places they've been!  <grin >


View of Table Mountain and the "back side" of the Tetons
from our NFS campsite in the Teton Valley.  (September, 2010)

Consider, too, that moving around the country for months or years at a time can play havoc with health care, group organizations, and other things that require some continuity. That's one advantage to retaining some sort of home base and going out for extended trips like we do.

So far Jim and I have kept all of our familiar medical providers. We see them in the spring and fall when we go back to check on the house. We've been able several times to find competent medical providers when we've needed them on the road, however. When we do sell our house and go full-time, we'll find new providers in another city that's more centrally located to the areas where we like to travel or in the place where we think we might "settle down" when we come off the road.

Keep in mind that choosing a full-time RV lifestyle doesn't have to be permanent.

You can always change your mind if it isn't satisfying. Don't worry about the curmudgeons who might say, "Told you so!" Find a new house, condo, or apartment where you used to live. Sell the RV or use it for shorter trips. Get your belongings out of storage and live the life you really want to live.


Heading west on US 285 from Kenosha Pass to the Collegiate Peaks in Colorado  (Aug., 2010)

Chances are, however, that you will find that selling your house and putting what you want to keep for "someday in the future" in storage will be quite liberating, allowing you to thoroughly enjoy your new journey to parts unknown!

WHICH LIFESTYLE WOULD JIM & I MISS THE MOST?

Jim and I have few ties to the Roanoke area, as I talked about in an earlier entry. I do have some attachment to our house and woods and the general beauty of the region (Blue Ridge Parkway, Appalachian Trail, etc.) but selling that place won't be as difficult as all the changes I made when I left the Atlanta area after living there for 25 years. I adapted fairly quickly to that new adventure, and I will do it even faster now with many fewer ties to the Roanoke area.

At this point in our lives it would definitely be harder to give up our RV lifestyle than our house.


View of Longs Peak from our campsite in Rocky Mountain Natl. Park, CO  (September, 2010)

A runner who is considering selling her house to live in an RV recently asked us what we miss most about our house when we're traveling in our RV for long periods of time. I answered her direct question in an e-mail but it made me realize that I'd miss a whole lot more if I could no longer travel in our RV for long periods of time:

The freedom to roam just about anywhere we please around the country. Hanging out in warm weather during the winter and cool weather in the summer (if we out-maneuver Mother Nature correctly). Every day is Saturday. Few or no schedules or demands on our time. Sleeping as late as we want. No need for an alarm clock except on race days. An occasional sunrise (we'd rather sleep late!) A leisurely cup of caf Vienna in the morning as we catch up on e-mail. Planning new adventures. Meeting interesting people in the campground or on a wilderness trail. Spotting another Cameo in our campground or on the road. Serendipitous discoveries of every kind. Visiting a national park that is new to us. Revisiting local, state, and national parks we love. Learning about local archeological and cultural history. Exploring ancient Native American sites. Living smack dab in the middle of a forest, desert, or mountain range. Running, hiking, and cycling in some of the most beautiful terrain imaginable. Exploring a new trail and seeing what's around each bend. Ditto for winding roads through the mountains. Panoramic views from the summit of high peaks. A kaleidoscope of wildflowers in an alpine basin. Tiny sun-dappled waves dancing across a lake. Water cascading over rocks in a rushing stream. The visceral pull of the tides on the Gulf coast. Birds singing and squirrels chatting away on branches above my head. Coyote choruses. Moose slurping water from a mountain creek. Elk bugling near the campground during the rut. Dozens of baby alligators swimming around their mama in the wetlands. Watching Cody roll around in snow on a mountain - in July. Sunset over the Grand Canyon. Sunset reflected in a lake. Sunsets anywhere. Gazing at the stars on a clear night. The thrill of seeing a meteor shower. A full moon hike in the Arizona desert. Owls hooting.

I could go on and on but you "get the picture."

I didn't mention anything about cities or populated areas, did I? Gee, what a surprise!


This isn't our idea of fun, either -- photo of the winter crowd of snowbirds at Quartzite, AZ
(from the January, 2011 "Highways" magazine published by the Good Sam Club)

Escaping to nature isn't as important for some other RVers. They'd much prefer to hang out in or near urban areas or with thousands of other RVers in Quartzite, AZ all winter. That's fine for them. It's just not us.

Remember: the RV lifestyle is whatever you want it to be.

WHAT ELSE IS A "HOME BASE" IN RELATION TO FULL-TIME RVing?

In my January 3 entries I used the term "home base" to mean having a house, condo, mobile home, apartment, or other type of dwelling and traveling in an RV for extended periods of time.

"Home base" has another meaning for full-time RVers -- it's their legal residence or domicile, the place where they register their vehicles, get their drivers license, buy vehicle insurance, have their mail sent, vote, pay some taxes, etc.

If you are retired or earn no income in the state in which you've been living -- and can prove that you live there less than six months of the year -- you may be able to choose another state to claim as your legal residence. (States have different residency rules, so beware.)

Why would anyone do this? To save a bunch of money, that's why.


South Dakota is a full-timers' friendly state, one of seven with no state income tax.
(view of Mt. Rushmore framed by a tunnel, May, 2009)

For example -- if you had the choice -- in these crazy economic times would you rather claim residency in a state like New York or California that levies high income taxes, has multi-billion dollar budget shortfalls, and must either raise taxes and fees even higher than they are and/or seriously cut services . . .

. . . or would you rather claim residency in a state that is more fiscally responsible and collects no income tax or outrageous fees that will affect you (think vehicle/RV registration and "personal property taxes")??

Entrepreneurs and high-income earners aren't the only ones migrating out of states like that in droves and into states with more favorable tax rates and legislators with more fiscal sense. So are full-time RVers.


Lake Livingston SP, Texas (Feb., 2010). The headquarters of the large Escapees RV Club,
which caters to full-time RVers, is located nearby. Texas has no state income tax.

States have a vested interest in this whole process, too. Each one wants as many residents as possible (for federal dollars and representation in Congress) and as much tax money as they can collect. Some states bend over backwards to encourage full-timers to establish a home base there by eliminating taxes on their income and keeping other taxes and fees that affect them (and everyone else) at a reasonable rate.

Note that I am not dispensing legal advice here. I'm not a lawyer or tax advisor, and I certainly don't know your particular circumstances. I'm just a wannabe full-timer who's learned a thing or two about this lifestyle and I'm putting it out there for your consideration. You can thank me after you've done your own research and talked to your own lawyers and tax advisors!

HOW DO I CHOOSE A LEGAL DOMICILE?

We first learned about this subject from an RVing friend we met a couple years ago when we were in need of a good professional mailing service. Further discussion and research led to the whole issue of full-time RVers being able to choose a home base. Here are some basics:

State income taxes: Every full-time RVer has some type of income. If it's high enough, Uncle Sam and 43 states want a portion of it!

It is my understanding that at the current time (before state legislators have a chance to screw around with their laws this term) seven states -- Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming -- do not collect taxes on any type of individual income, including wages, pensions, Social Security, dividends, and interest. Two states, New Hampshire and Tennessee, tax some wages but not most sources of income that retirees have.

Don't take my word for this, however, because the states are continually tinkering with their laws. Do your own timely research.

There are other financial considerations regarding the choice of a home base besides state income taxes. That's just the most obvious factor. Making a poor decision about other costs might wipe out any income tax savings a particular state offers. You might actually come out ahead if you choose a state with a low income tax but lower taxes and fees on everything else that affects your wallet.


Mustang Island, TX  (January, 2009)

Here are some other factors to consider:

  • State sales or excise tax, which will affect how much you pay in taxes for a new RV, tow vehicle, or towed vehicle. Even if you buy a new vehicle in a high-tax state, you will pay only the sales tax levied by your state of residency if it's lower. If your home base state has a tax rate of 6%, for example, you'll pay considerably more than you will to a state with a 3% rate on vehicles. Purchase even a $100,000 RV, which is low-end for a Class A or C motorhome, and you're talking about a chunk of change -- a difference of $3,000 in that simplified example.
  • Vehicle registration fees and license tag fees -- compare current rates among the states you're considering. Some charge flat fees, others figure the rates on weight, age, and/or $$ value of the vehicle.
  • Personal property taxes on vehicles -- try to find a state that doesn't charge this because it can add up to thousands of dollars on an RV and tow or towed vehicle.
  • Insurance rates for vehicles vary widely among and inside states for many reasons (claims, weather hazards, mandatory state minimums for liability, different insurance company rates, etc.); do your homework. Be sure to include coverage for the contents of your RV, too.
  • State emissions tests and/or vehicle safety inspections don't cost much but they can be a big hassle if you're traveling around the country and your home base is at the other end of the country when one of these tests is due. Some states do not require either emissions tests or inspections.
  • Estate and inheritance taxes -- some states have none, one, or both -- in addition to federal estate taxes!
  • Voting -- compare address requirements and procedures for registering to vote and voting absentee. You may not be interested in local issues if you don't actually live in the area, but to be a good citizen we think it's important to vote on state and national issues. We do it by absentee ballot when we're traveling.
  • Some people have to change their medical insurance when they change their residency from one state to another = more homework to do!


The alligators at Brazos Bend SP in Texas won't put you in the hospital
unless you get too close to them!  (March, 2010)

Here are even more things to consider if you're thinking about changing your legal domicile.

It's best to have a current driver's license from your home base state. You'll most likely have to appear in person for that, especially to get one of the new federally-compliant Real ID driver's licenses that will soon be mandatory for all U.S. citizens. You may also have to appear in person to register to vote. Some states allow you to register by mail.

It's also a good idea to rewrite your will to comply with your new state's laws to eliminate problems if you die unexpectedly while full-timing.

WHY ARE ALL THESE STEPS RECOMMENDED?

Many government drones simply don't understand the concept or legalities of extended-travel or full-time RVing. To avoid any hassles from the state you left re: taxes they say you owe them, get all of your ducks in a row in your new state as quickly as possible after you make the decision to change residency. The more proof of residency you have, all the way down to a library card, the better your case if you end up in a tax dispute.

You may also want to consider changing your medical providers, bank/credit union account(s), and phone number to your new legal domicile. That's more for residency proof than convenience. I don't see any real need to change financial accounts when you can do everything online, and cell phone numbers are portable from one state to another.


Nevada has no state income tax, either. (Lake Tahoe, July, 2009)

Choosing an appropriate RV home base for your particular situation takes a lot of time and research. It's well worth it unless you're rolling in dough and don't care how much the government gets. Just be sure to use information from each state that is as current as possible because any of these factors can change from year to year.

If you'd like a handy way to compare taxes, fees, cost of living, and a lot of other useful data between the fifty states, I recommend the book, Choosing Your RV Home Base. It's a fairly comprehensive planning guide by Roundabout Publications that is updated yearly. It's interesting to read even if you aren't considering moving to another state or claiming another state as your legal domicile.

It does not contain all the information you need, however. You'll need to do some further research to get all the facts. Also double-check the figures with the specific locality you're considering in case any of the information has changed since the last book was published.


Dramatic sunset at Galveston Island SP, Texas  (February, 2008)

Then keep your fingers crossed that if you choose a state with no or low taxes and fees, the legislature doesn't vote to increase them significantly in the future to help balance the budget! States that have gone this route already are very short-sighted because more people -- not just full-timers -- have fled to states that levy lower personal and business taxes.

Just ask California, New York, Connecticut, and some other states how this has backfired on them.

Next topic in the serieshow to stay "connected" in your RV while gallivanting around the country -- internet, mail, TV, etc.

Happy trails,

Sue
"Runtrails & Company" - Sue Norwood, Jim O'Neil, and Cody the Ultra Lab

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