Vacation Home in NY? Watch out!

New York may be going after taxpayers with New York vacation homes who spend more than 183 days in the state, regardless of whether the time is spent at a vacation home or elsewhere in the state.

Under a statutory resident provision, a taxpayer meeting the following tests is deemed to be a de facto New York resident:

• The taxpayer spends more than 183 days in New York, and
• Maintains a permanent place of abode in New York.

In Barker, NY Div. of Tax Appeals, DTA No. 822324 (Jan. 13, 2011), the taxpayers were residents of Connecticut.  The husband commuted to and from New York City on a daily basis, and as a result spent more than 183 days in New York.  The taxpayers owned a vacation home in the Hamptons, but stayed there for only a few days per year.  The taxpayers argued that their vacation home was not a permanent place of abode since they spent very little time there.  However, the New York Tax Appeals Tribunal disagreed and held that where the days were spent was irrelevant – merely owning residential property in New York was enough.

This is the first time that New York has taken this position.  In the past, taxpayers typically met the statutory resident test if the requisite “more than 183 days” were spent at the permanent place of abode.  A vacation home did not necessarily constitute a permanent place of abode.  That is no longer the case.

Both the Wall Street Journal and the New York Times have covered this issue.

If you have questions or would like more information, you can reach me at crichie@kaufmanrossin.com, or 305.858.5600.