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:
- Domicile Test: The individual is domiciled in New York and views New York as their permanent home.
- 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
- 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
- Obus used the home for 2-3 weeks per year for personal activities.
- 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:
- He used the home for only 2 – 3 weeks per year.
- 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.
- Obus did not keep personal possessions in the home and therefore was not a residential interest.
- 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.