Under New York tax law, there are two bases to tax individuals as New York residents. Individuals domiciled in the State and individuals not domiciled in New York but who are present for more than 183 days and maintain a “permanent place of abode” in the State (statutory residence) (N.Y. Tax Law § 605 [b] [1] [B]) are both taxed as New York residents.

In the Matter of the Petition of NELSON OBUS AND EVE COULSON, DECISION DTA NO. 827736 (1/25/2021), the State of New York Tax Appeals Tribunal considered an appeal by a taxpayer that resided in New Jersey, but worked in New York City and owned a vacation home in Northville, New York. It was undisputed that the taxpayer worked primarily out of his office in New York City and, as such, was present within New York for over 183 days during each of the years in issue. Consequently, the key issue in dispute was whether the taxpayer’s vacation home qualified as a permanent place of abode in New York.

The Northville, New York home was located more than 200 miles from the taxpayer’s New York city office. This home has two stories with five bedrooms and three bathrooms. The home has year-round climate control. In addition to the main house, there is an attached apartment with a separate entrance and key. The apartment is occupied year-round by a tenant who had an existing rental agreement.

It is undisputed that petitioners use this home for vacation purposes only and spent no more than 2-3 weeks per year there.

The tribunal noted that the the relevant regulation provides, in part, that:

“A permanent place of abode means a dwelling place of a permanent nature maintained by the taxpayer, whether or not owned by such taxpayer, and will generally include a dwelling place owned or leased by such taxpayer’s spouse. However, a mere camp or cottage, which is suitable and used only for vacations, is not a permanent place of abode. Furthermore, a barracks or any construction which does not contain facilities ordinarily found in a dwelling, such as facilities for cooking, bathing, etc., will generally not be deemed a permanent place of abode (20 NYCRR 105.20 [e] [1]).”

Here, the tribunal concluded that the taxpayer’s Northville home constituted a permanent place of abode, rendering the taxpayer’s statutory residents of New York. The tribunal reasoned that the dwelling exhibited physical characteristics making it suitable for year-round habitation. The Taxpayer’s owned the Northville home and stayed there occasionally for vacation purposes. The tribunal concluded that the taxpayer’s maintained a permanent place of abode in their Northville home by using it as a vacation home, thereby exercising a sufficient residential interest in the dwelling.

What constitutes a “permanent place of abode” in New York continues to be an unsettled area in New York tax law, but decisions such as this confirm that many types of residential properties will be found to be permanent places of abode in New York. Taxpayer’s trying to avoid being deemed statutory residents should consider divesting themselves of all New York residential interests or ensuring that they are not present in New York for more than 183 days in any calendar year.

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