Second Homes in New York State About to be on Fire Sale

Having a second home in New York City or state may be more expensive now than ever. For those with places in the city, the state Taxation Department will require state residents who own second homes in New York City to report the number of days they spend in the city, which will likely result in more audits for commuters. Albany, you see, wants that New York City income tax. Don’t think you are off the hook if you own a home in, say, the Hamptons, but live in Connecticut. In January. a New York tax appeals tribunal affirmed a decision that a New Canaan, Conn., resident who worked in Manhattan and owned a Long Island home, still owed the state an additional $1 million. The million is taxes on income the resident, John Barker, and his wife earned outside of New York, plus interest and penalties. Of course, Mr. Barker already was paying New York state taxes on income he was earning in the state.

Experts now say the case will alert many second homeowners to the very real possibility of additional taxes if they spend more than 183 days per year in New York. To clarify: the income tax applies to people who work, or visit, or live there part of the year — more than 180 days, or 6 months. Even if they don’t sleep there! I dialed up tax attorney Eric M. Kramer on Long Island who does a ton of work in this area. He told me he has received calls from other shocked attorneys on this, but in reality, this is nothing new — New York has always had this law, this case just brought it to everyone’s attention. There are tales that the state used to hound the Rockefellers, spying on them to make sure they were not staying in their New York City apartment for one second over 180 days. (The cost of having these spies on the payroll, including over-time, medical and pension benefits to retire at age 50 , might well cost more than whatever they would have collected had he overstayed the time limit. But what do I know?) To answer my questions, Eric said it matters not whether you commute. If you spend the DAY in New York City, that counts. So you can either own a home or rent an apartment, if you work, live, or even visit someone, say an aging parent who is ill, for more than 180 days a year, you will be liable for New York state income tax even on income generated outside of the state.

Thoughts? (Love this Hamptons house… $2000 to $5000/week.)

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