Can I Claim My Parents San Diego House as Domicile

I recently spoke with David, a man facing a potential six-figure tax bill because he mistakenly believed simply spending time in California meant he wasn’t a resident. He’d moved out of state years ago, but continued to “winter” in his parents’ San Diego home, maintaining a mailing address there. When his parents passed away and he inherited the property, he assumed that solidified his new domicile. It didn’t. It created a nightmare. The cost? Over $100,000 in back taxes and penalties.

Establishing domicile is far more complex than just having a physical address, especially when inheriting property. As an Estate Planning Attorney and CPA with over 35 years of experience, I frequently encounter these situations, and the consequences can be devastating. People often underestimate the scrutiny the California Franchise Tax Board (FTB) applies to residency claims, particularly when dealing with inherited real estate. A mailing address alone is not enough. It’s about demonstrating your intent to make California your permanent home.

What Exactly Constitutes Domicile in California?

Domicile isn’t simply where you physically reside; it’s your true, fixed, and permanent home to which you intend to return, even during absences. It’s a legal concept with significant tax implications. For estate planning, establishing California domicile correctly is critical for leveraging the benefits of California’s trust laws and ensuring your assets are distributed according to your wishes, while minimizing tax burdens.

Can Inheriting a Home Establish Domicile?

Inheriting a home in San Diego can contribute to establishing domicile, but it’s not automatic. The FTB will look at the totality of your circumstances. Simply owning property doesn’t make you a resident. They’ll delve into where you spend most of your time, where you conduct your financial affairs, and where your closest personal ties are.

For example, if you live primarily in Nevada but spend several months a year in the San Diego house you inherited, while also continuing to file taxes as a Nevada resident, the FTB will likely question your claim to California domicile. They won’t be swayed by the property ownership alone. You must demonstrate a clear intention to make the San Diego property your permanent home.

How Does the FTB Determine My Domicile?

The FTB uses a “Closest Connection” test, evaluating a multitude of factors – nineteen, in fact – to determine where your true domicile lies. This includes things like:

• Location of your primary physician: Where do you receive most of your medical care?
• Location of your children’s schools: Where are your children primarily educated?
• Location of your bank accounts: Where are the majority of your financial assets held?
• Registration of your vehicles: Where are your cars and other vehicles registered?
• Social ties: Where are your religious, civic, and social organizations?

It’s not about ticking off a certain number of boxes, but about the weight of the evidence. The FTB will assess which state holds the strongest connection to your life and intentions. Spending less than 183 days in California does not automatically terminate residency; the FTB uses the ‘Closest Connection’ test (evaluating 19 factors like your primary doctor and social ties) to determine domicile.

What About the Petition for Succession Under AB 2016?

Recent changes to California Probate Code, specifically AB 2016, have streamlined the transfer of certain estates, but it’s important to understand the limitations. For deaths on or after April 1, 2025, a primary residence valued up to $750,000 qualifies for a ‘Petition for Succession’ under AB 2016 (Probate Code § 13151). This is a significant development, but it’s crucial to remember this is a Petition that requires a Judge’s Order, NOT an “Affidavit.”

Furthermore, to qualify, the decedent’s other non-real estate assets (cash, stocks, etc.) must typically remain below the separate $208,850 Small Estate limit. Don’t confuse this with the Small Estate Affidavit, which is strictly for real property <$69,625, used for timeshares/vacant land. How Does My CPA Background Help with Domicile? As a CPA, I bring a unique perspective to estate planning. Properly establishing domicile has significant implications for step-up in basis – that is, the value of inherited assets is “stepped up” to fair market value at the time of death, potentially reducing future capital gains taxes. Accurate valuation of the property is key, and my financial expertise allows me to navigate those complexities effectively. Incorrectly claiming domicile could result in lost tax benefits and unnecessary penalties. I also understand the importance of coordinating your domicile with your overall estate plan. A well-structured plan will not only minimize taxes but also ensure your assets are protected and distributed according to your wishes. What If I'm Being Audited for Residency? If the FTB questions your residency, they’ll likely issue Form 4600 (Residency Questionnaire). Be prepared to provide detailed documentation supporting your claim. Auditors will use Form 4600 to scrutinize your life, including the location of your dentist, the registration of your pets, and where you keep your safe deposit boxes. This isn’t a process to take lightly.

How do probate courts in California evaluate intent when a will is challenged?

In California, a last will and testament is reviewed under probate standards that focus on intent, capacity, and execution. Clear drafting reduces ambiguity, limits misinterpretation, and helps families avoid unnecessary conflict during estate administration.

• Ambiguity: Avoid vague terms that trigger interpretation fights.
• Incapacity: verify mental state at signing.
• Errors: check for codicils often.

For California residents, understanding how intent, authority, and compliance interact is one of the most effective ways to protect family harmony and estate integrity. A will that anticipates probate scrutiny is far more likely to be honored as written and far less likely to become the source of unnecessary conflict.

Controlling Legal Standards for Establishing Domicile and Residency

• Residency Guidelines: FTB Pub 1031 (Guidelines for Determining Resident Status)
  This is the primary resource for the “Closest Connection” test. In 2026, it details how the FTB evaluates 19 factors—including the location of your healthcare providers and social ties—to determine if your presence in the state is “permanent” or merely “transitory.”
• Voter Registration: California Secretary of State – Voter Registration
  Updating your voting address is a critical indicator of intent. For the June 2, 2026, Primary Election, the deadline to register online is May 18, 2026. This serves as a public declaration of your primary home.
• Federal Estate Tax: IRS Estate Tax Overview
  While domicile determines state tax, this resource outlines federal guidelines. It reflects the 2026 OBBBA update, which permanently set the federal estate tax exemption at $15 million per person ($30 million for couples), indexed for inflation.
• Proof of Residency: California DMV – REAL ID Checklist
  Since the federal enforcement deadline passed in 2025, a REAL ID is mandatory for domestic flights. This page lists the specific residency documents (e.g., utility bills, tax returns) that the state accepts as proof of a permanent California address.