Snowbird’s Guide to Insurance and Finances in Two States

For many retirees, the snowbird lifestyle, splitting time between a northern home and a warmer southern retreat, is a dream come true. But living in two states comes with unique financial, tax and insurance considerations. This guide will help you navigate the complexities of being a resident of two states, ensuring you're protected and financially prepared in both. 

How Is Residency Determined? 

Understanding the difference between domicile and residency is crucial. Your domicile is your permanent legal home, in other words, the place you intend to return to and maintain long-term ties. You can only have one domicile, but you may be considered a resident in more than one state for tax, or warmer weather, purposes. 

Most states use the 183-day rule to determine residency. If you spend more than 183 days in a state, you may be considered a statutory resident, even if your domicile is elsewhere. This can lead to dual residency, where both states claim you as a resident, potentially resulting in double taxation. 

To avoid this, establish your domicile clearly by: 

• Registering to vote
• Obtaining a driver’s license
• Filing taxes
• Keeping your most valuable possessions in one state
• Renting or buying a residence
• Updating your address with institutions like your bank, the U.S. Postal Service (USPS) and Internal Revenue Service (IRS)

Tip: Keep detailed records of your time in each state to support your residency claims.  

Financial and Tax Considerations 

Living in two states affects everything from income tax to property management. Here's what to consider: 

Property Taxes 

Each state has its own property tax rates and rules. Some offer homestead exemptions for primary residences, which you can only claim in one state. Second homes typically don’t qualify and may be taxed at a higher rate. 

Primary State Income Taxes 

Your domicile state can tax all your income, even if it's earned elsewhere. States like Florida and Texas have no state income tax, making them attractive for snowbirds in addition to the often-warmer weather. 

Non-Resident Income Tax 

If you earn income in your non-domicile state (e.g., rental income or part-time work), you may need to file a non-resident income tax return. A tax professional or financial advisor can help you avoid double taxation and ensure compliance. 

Retirement Income 

Some states tax retirement income (pensions, IRAs, 401(k)s), while others don’t. For example: 

• Florida: No tax on retirement income
• Minnesota: Taxes most retirement income
• Iowa: Exempts retirement income for residents 55+

Estate Taxes 

Estate tax laws vary by state. If you own property in multiple states, your estate may be subject to estate tax in more than one jurisdiction. Proper estate planning can help minimize this risk. 

Home Maintenance 

The cost of a second home includes more than just the mortgage. Budget for: 

• Utilities
• Insurance
• Repairs
• Travel expenses
• Furnishings

Property Management 

If you plan to use your second home as a rental home when you’re not there, consider hiring a property management company to handle maintenance, tenant issues and emergencies. This is especially helpful if you're not nearby year-round. 

Insurance Considerations 

Maintaining insurance coverage across two states requires careful planning as each aspect may be different from the other. Here’s what to know: 

Health Insurance 

If you're under 65, look for a multi-state insurance plan with a broad provider network. If you're on Medicare: 

• Original Medicare + Medigap offers nationwide coverage
• Medicare Advantage plans may have limited networks

Multi-State Coverage for One Vehicle 

You don’t need multi-state insurance for one car if you bring it with you. However, you must meet the minimum insurance requirements of the state where the car is primarily garaged. Ensure your policy includes personal liability coverage in both locations. If you happen to get in an accident in a state where you have residency (your additional home), your vehicle that’s properly insured in your domicile state (your permanent residence) should provide coverage limits that meet the requirements of your residency state.  

Car Insurance for Multiple Cars 

If you keep cars in both states, you’ll likely need separate policies for each car and have them registered and insured in their respective states. 

Second Home Insurance 

Your second home needs home insurance coverage too. These policies often have different coverage limits and may not include personal property or liability unless added. You may need to consider multiple policies for multiple homes to ensure full protection. Sitting down to have a conversation with your Farm Bureau agent is the best way to determine what kind of coverage you may need.  

Ready to Review Your Coverage?

Being a snowbird offers the best of both worlds, but it also requires thoughtful planning. From multi-state insurance to second home insurance and tax compliance, staying informed helps you enjoy your lifestyle with peace of mind. Connect with a Farm Bureau agent today to ensure your insurance and financial plans are aligned with your snowbird lifestyle. We’re here to help you protect what matters most, no matter where you call home.