I know someone moving from GA to TN. They are selling their home, and upgrading by about $200k. They are exploring the idea of pulling money out of retirement to cover the delta – effectively paying cash.
In order to avoid paying GA state income tax on the money withdrawn from retirement (no tax shelter), could they use a bridge loan until they are technically residents of TN, then withdraw the money and pay it all off? This saves them 5% ($10k) before bridge loan costs.
Or is the bridge loan even necessary, just withdraw and claim it as a resident of TN? Or is there another creative financial instrument here that can help?
Avoiding state income tax GA -> TN
byu/MSchroedy inRealEstate
Posted by MSchroedy
2 Comments
Are they intending to buy the house before they move? If so, then a bridge loan is the easiest solution. If they’re moving first, then they would simply need to establish residency, then withdraw the money.
There are more details but Georgia has a retirement income exclusion of $65K($130K for a couple) once you turn 65.
If they are 65 then it is possible that they would not owe any Georgia income tax.