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New Tax Rule – Could Give Second Home Market a Big Boost

The secondary home market in New York just got a massive lift. The new decision from the New York State Supreme Court Appellate Division has big news for anyone who has a second residence in the state of New York, along with a full-time residence in another state. The decision states that these specific taxpayers may not be subject to paying New York State income taxes on their total income.

 

This decision comes after a New Jersey resident, Nelson Obus challenged the system. Obus lives in New Jersey but commutes to New York for work, as well as owning another property in Fulton County, New York which he only used as a vacation home.  Following his discontent with the tax process, he brought his complaint to the attention of the courts.

The 183-Day Rule

The 183-Day Rule played a big factor in this court case. This rule states that if you travel to any state or country for at least 183 days out of the year, you are considered a tax resident for that year. Even if you are only traveling there for a few hours a day, like work for example, which is Nelson’s case. The hours spent working there counts as a day lived in the state.

The Case

When Nelson’s case reached the New York State Supreme court, the justices annulled the tax tribunals’ determination, which meant a victory for Nelson Obus. “Let’s look at the legislative intent of the law,”  said tax attorney Yvonne Cort. “The statutory resident law was intended for people who were trying to evade taxes, who were spending a lot of time in the state.” The judges decided that this was inconsistent with the legislative intent of the law, ultimately leading to their decision.

However, this decision is of no benefit to people who have two houses in New York State. Someone who lives in Connecticut or New Jersey but commutes to New York for work, as well as owning a secondary property in the state will be the ones affected.

Wrap Up

This case will most likely have a massive impact on commuters who have a second home in the empire state. If this new tax law is applicable to you, call your accountant or advisor to ensure the necessary steps are taken to reduce your tax burden.

 
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