Deciding where to retire could be a very taxing decision. Literally, that is.

A CNBC report warns that retirees should look beyond the obvious when evaluating how taxing a potential new retirement home might be, since some states have taxes that aren’t obvious but can eat away at retirement savings.

Shopping around can definitely be worth your while, according to a couple who decided to sell their Fort Lauderdale home and relocate to the Atlanta area.

While Florida is touted as a retirement dream, thanks largely to the state’s lack of an income tax, the report points out that the couple made some welcome discoveries about the taxes in their new home state that they certainly hadn’t expected after what they experienced in Florida.

For instance, instead of forking over $20,000 per year in property taxes, their similar-sized new home only cost them $5,000 annually in taxes since they didn’t have to pay taxes for schools in Georgia.

In addition, they were pleasantly surprised to find that the first $130,000 of their retirement income from pensions or investments was exempt from taxes in Georgia, as was their Social Security income.

Other states with no individual income tax, by the way, include Alaska, Nevada, South Dakota, Texas, Washington and Wyoming. New Hampshire and Tennessee charge income taxes only on dividends and interest.

But a number of states tax retirement income, which can be a nasty surprise if you depend on that income and aren’t expecting it after you move. Wolters Kluwer data indicate that 13 states currently tax Social Security income, and most states have some kind of tax on pensions—although that varies from place to place.

Not just property tax can vary wildly, but retirees are prudent to check out personal property, sales and estate taxes as well.

Paying personal property taxes year after year on a boat or RV on a retiree’s income can make other pleasurable objectives like travel—or even not-so-pleasant obligations, such as health coverage—difficult, if money runs short.

The article cites Peter J. Creedon, CEO at Crystal Brook Advisors, warning that there can be higher taxes or fees on everything from registering cars and boats to taxes or surcharges on resorts.

And then there’s the little matter of avoiding taxes from the state you’re leaving behind. If you don’t properly establish residence at your new home, you could still be liable—and that means that in some cases you must file a form (such as when moving to Florida), but in others the line is not so clear cut.

You should avoid spending more than a half year (183 days) in your old home state, and if you’re keeping property in the old state, you may want to transfer ownership to a trust, a limited liability company or a relative.

Then of course you should plan on getting a new driver’s license, change your address on mail and bank accounts and finding new medical services in your new home state.

Instant Insights /

Beware hidden taxes when deciding on retirement home

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