N.Y. case: Vacation home not a permanent place of abode

In a significant development, a New York appeals court recently held that a taxpayer’s vacation home did not, in fact, qualify as a “permanent place of abode” under New York’s personal income tax statutory residency rules. 

On June 30, the New York Supreme Court, Appellate Division, Third Department, reversed a lower court ruling and decided in favor of the taxpayer, Nelson Obus, concluding that he was not a New York resident. (In re Obus v. N.Y. Tax App. Trib., Dkt. No. 533310 (N.Y. S.Ct., App. Div., 3d Dept.) (06/30/2022).

New York residency rules overview

Under New York’s residency rules, a taxpayer can be a “resident” in one of two ways. First, a taxpayer whose domicile, or true home, is within New York is a resident. Second, a taxpayer whose domicile is elsewhere can nevertheless be treated as a New York resident if they satisfy the “statutory residency” test, which itself has two elements. Generally speaking, a taxpayer who maintains a permanent place of abode within New York and who spends greater than 183 days within New York will be treated as a statutory resident of New York. The issue of whether a mere vacation home satisfies the definition of a “permanent place of abode” has been a hotly contested issue that, until now, taxpayers have generally lost.

Obus case overview

In the Obus case, the taxpayer was a domiciled resident of New Jersey who worked in New York City and owned a vacation property in the Adirondacks in upstate New York. It was conceded that he spent greater than 183 days in New York. Accordingly, the sole issue focused on whether the lower court properly concluded that his vacation house constituted a permanent place of abode. The lower court reasoned that Mr. Obus had the right to reside in the house, he did maintain living arrangements there, and he exercised those rights, albeit infrequently, during the years in issue. Accordingly, the lower court concluded that Mr. Obus maintained a permanent place of abode in New York and therefore was a New York statutory resident.

However, on appeal, the Appellate Division disagreed. The court first looked to the legislative history behind the statutory residency rules, which was to prevent tax evasion by New York residents. The court then looked to precedent, where the Court of Appeals has previously concluded that it must be demonstrated as a factual matter that a taxpayer has a “residential interest” in a dwelling before it can constitute a permanent place of abode (In re Gaied v N.Y. Tax App. Trib., 22 NY3d 592 (2014)). 

New York argued that the taxpayer maintained the vacation dwelling for his own use, thus satisfying the residential interest requirement. The taxpayer, though, argued that his residence is located in New Jersey and that his vacation home is more than 200 miles from his office in Manhattan.

The Appellate Division concluded that a finding of a residential interest requires that there must be some basis to demonstrate the dwelling was, in fact, utilized as a residence. The inquiry must go beyond the mere objective characteristics of the house and must evaluate the nature and duration of the taxpayer’s subjective use of the property. 

Under the facts, the court concluded that the taxpayer did not utilize the dwelling in a manner which demonstrates that he had a residential interest in the home. First, Mr. Obus used the property at most for three weeks during the year for vacation purposes; for skiing or visiting the Saratoga Springs racetrack. Second, the house was not suitable for regular commuting to Mr. Obus’s job in New York City, which was over four hours away (each way). Third, the taxpayer did not keep personal items at the property, and brought such items with him each time he visited. Lastly, a year-round tenant resided in an attached property, whom Mr. Obus would notify of his visits before his arrival. In other words, the facts supported the taxpayer’s use of the dwelling as a vacation property, not as a residence. Accordingly, the taxpayer’s use of the property did not satisfy the statutory residency test.

What does CohnReznick think?

The Obus case represents a noteworthy development in the residency audit arena. Historically, New York has typically treated vacation homes as sufficient to satisfy the “permanent place of abode” prong of the statutory residency test. It would seem that taxpayers may now argue that a vacation property does not qualify as a permanent place of abode under similar facts: inter alia, provided that they use it infrequently, it is too far for regular commuting to their office, and they do not keep much in the way of personal effects and belongings at the dwelling. 

Residency matters are highly fact-specific, with each case rising and falling on the facts and circumstances presented. With the increase in remote work likely increasing the use of vacation homes, these arguments might lose steam for certain taxpayers. For others, this may present planning opportunities as well as a new line of defense.


Corey L. Rosenthal, Principal, State and Local Tax Practice Leader


Subject matter expertise

  • corey rosenthal
    Contact Corey Corey+Rosenthal corey.rosenthal@cohnreznick.com
    Corey Rosenthal

    JD, Principal, Practice Leader, State and Local Tax (SALT) Services

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