Update for the New York Statutory Residence Rule

January 6, 2023by Frontier Group

The findings of the Obus v. New York State Tax Appeals Tribunal proves beneficial to those taxpayers who do not reside in New York, however, owns a vacation home in this state.

Under New York law, a taxpayer is deemed ‘New York resident’ in two ways:

  1. Domicile Test: The individual is domiciled in New York and views New York as their permanent home.
  2. Statutory Resident Test: The individual is domiciled outside of New York, however:
  • (a) maintains a “permanent place of abode” in New York *
  • (b) spends more than 183 days of the year in New York.

*Note – New York previously implemented that a permanent place of abode is a residence that is suitable for year-round use; including rentals and vacation homes.

Application to the Obus Case

Key notes:

  1. Obus was a domiciliary of New Jersey and commuted daily to New York City for work and in 2011, Obus and his wife purchased a vacation home in New York
  2. Obus used the home for 2-3 weeks per year for personal activities.
  3. The home also included an attached apartment, which was occupied by a tenant.

Upon filing a Non-Resident New York State Tax Return and stated that they did not maintain a permanent place of abode in New York; they were audited, and it was determined by the New York Division of Taxation and Finance that the vacation home was in fact a permanent place of abode as they had a right to reside there.

Obus appealed this decision based on the below facts:

  1. He used the home for only 2 – 3 weeks per year.
  2. The home was not bought to commute to and from his workplace as the location of the New York home was more than 4 hours commute away.
  3. Obus did not keep personal possessions in the home and therefore was not a residential interest.
  4. He would inform his tenant when he would be staying at the New York home.

With the Obus ruling, a vacation home in New York no longer automatically qualifies as a permanent place of abode for purposes of the statutory resident test.

Instead, this will be determined as to whether a taxpayer has a residential interest in the vacation home.

Frontier Group