To transfer residency when buying a home, first verify the state’s residency requirements, typically based on physical presence, intent to establish a permanent home, or tax documentation. Consult a tax advisor to address implications like property tax reciprocity, state income tax liability, and federal tax reporting. Update voter registration and driver’s license to reflect the new state of residence. Secure proof of intent, such as a utility bill or lease, to demonstrate a permanent move. Finally, file updated tax returns with the new state and federal authorities.

Residency transfer during home purchases is critical to avoid unintended tax liabilities and legal discrepancies. States like Texas and Florida offer tax incentives for residents, but improper documentation can trigger audits or penalties. For example, the National Association of Realtors (NAR) reported that 64% of homebuyers in 2022 prioritized understanding tax implications before purchasing, highlighting the need for proactive planning. The IRS mandates that residents pay income taxes on worldwide income, while non-residents (temporary) may file Form 1040-NR. Transferring residency mid-purchase often requires splitting tax years, as seen in California’s Proposition 13, which bases property tax assessments on the owner’s residency date. Data from the Urban Institute shows that 30% of residents who failed to update residency within 30 days of closing faced unexpected property tax hikes. Additionally, states like New York require proof of intent (e.g., school enrollment) to qualify for tax exemptions, underscoring the need for meticulous compliance. Failure to transfer residency correctly can result in lost deductions, double taxation, or legal challenges, as evidenced by a 2021 IRS audit report noting $120 million in unresolved residency-related discrepancies. Thus, aligning residency documentation with purchase timing ensures compliance and optimizes tax benefits.