I was asked by Naples Daily News to discuss split domicile today and I wanted to share my thoughts with you all…
Some prospective Florida residents feel that splitting domicile between themselves and a spouse will allow them to have the best of both worlds. While there are circumstances that could call for splitting domicile, it is generally not advisable. Most people who would like to split domicile are interested in doing so in order to claim a homestead exemption in both states. However, Florida will not allow you to retain your Florida homestead exemption if your spouse is claiming a homestead exemption in another state.
Furthermore, a split domicile raises other important issues. For example, some states require a married couple to file a joint state income tax return if the couple files a joint federal income tax return. In addition, depending on your timing, a split domicile may limit the amount of your total federal capital gain exclusion (from $500,000 to $250,000) for the sale of a principal residence after one spouse changes his or her domicile.
If the reason for considering a split domicile is because you and your spouse spend substantial portions of the year apart and obtaining two property tax homestead exemptions is not a motivating factor, be sure to consult with a Florida attorney and carefully consider the potential advantages and disadvantages.