You're on the right track with muzosi's comments. A few comments:
1. You definitely should take capital gains before moving to a high tax state **IF** you really need to do that. As long as you don't actually realize those gains, neither the IRS or state can tax you. Also realize that you can take some LT gains yearly as supplemental income and possibly avoid ANY tax from the IRS (however I'm sure CA would still want their cut and probably HI, but you should check that). If you can manage your taxable income to be at or below the 15% IRS bracket ($73,800 for a married couple this year), IRS capital gains are ZERO as long as you don't exceed the taxable income limit.
bankrate.com
2. You can only offset investment expenses (BTW investment fees, advisory services, etc. all count in addition to margin interest) against investment income (interest, dividends, capital gains, etc). In my case I'm required to take short term capital gains annually from a Charitable Remainder Trust so I usually have no problem using the investment expense. If you cannot fully utilize it in a given year it can be carried over to the next. BTW I switched from TurboTax to H&R Block several years ago but I recall TT will handle investment expenses, but you should probably consult an attorney to make sure you fully understand your situation before doing anything.
3. Since you've never itemized before, be aware that mortgage interest is also a deductible expense. With rates so low now, I'd definitely consider a mortgage on your new home and use funds for other purposes (i.e. investing). Although I could pay off my mortgage now, by choice I expect I'll have one the rest of my life (as long as current tax rules are in place). And also be aware that any "points" on a new mortgage can be taken in the year you pay them.
Since you're not that familiar with tax rules regarding deductions, etc. you should definitely consult a tax attorney or financial planner before making the moves you're considering (i.e. $300k purchase, moving back to the US, etc.) I would personally think about ANY state in the union would be better than CA for a retiree, unless there are other reasons you want to live there (e.g. family). NV is not that far away, has similar climate options and NO state income tax. |
