New York appeals court holds that vacation home not enough to subject taxpayer to statutory residency

The New York Supreme Court, Appellate Division, held on June 30, 2022, in Matter of Obus v. Tax Appeals Tribunal, that the taxpayer was not a statutory resident of New York as he did not use his vacation home as his residence and, accordingly, the vacation home was not a permanent place of abode. The decision reversed the New York Tax Appeals Tribunal’s ruling that the taxpayer’s vacation home was a permanent place of abode because it has physical characteristics making it suitable for year-round living.

New York residency rules

New York State tax law has two general provisions to determine if an individual is a resident for tax purposes.

  1. A person domiciled in New York is a resident.
  2. A person domiciled outside of New York, but who maintains a permanent place of abode in New York, and spends more than 183 days in the state, is a resident, unless such individual is in the active service of the armed forces of the United States.

The person described in the second point noted above is also known as a statutory resident. By default, anyone who is not a resident is a non-resident.

Permanent place of abode

New York regulations define permanent place of abode as the “dwelling place of a permanent nature maintained by the taxpayer, whether or not owned by him, and will generally include a dwelling place owned or leased by his or her spouse.” The state’s residency audit guidelines instruct an auditor to look at the abode’s physical attributes and the nature of the relationship the taxpayer has with the abode.

Physical attributes

A “permanent place of abode” must be suitable for year-round use. The New York State Regulations state that “a mere camp or cottage, which is suitable and used only for vacations, is not a permanent place of abode.”


Nelson Obus and his wife were domiciled in New Jersey.  Obus worked primarily out of his office in New York City as chief investment officer of Wynnefield Capital, which he co-founded in 1992. During the years 2012 and 2013, Obus was present in the state for more than 183 days per year and he owned a vacation home in Northville, New York — more than 200 miles from his office.   The vacation home was used by Obus for three weeks, at most, during each year and was not close enough to New York City to be used for access to his job. The home was also occupied by a year-round tenant who was informed of Obus’s presence before his arrival and Obus did not keep personal effects at that location.

The couple filed joint nonresident income tax returns for 2012 and 2013, but the New York State Department of Taxation & Finance concluded that they were statutory residents after an audit of those years.

ALJ and Tax Tribunal rulings

A New York Division of Tax Appeals administrative law judge (“ALJ") ruled in August 2019 that the vacation home did not meet the exception under the division’s regulations for “a mere camp or cottage, which is suitable and used only for vacations” and was a permanent place of abode. It concluded that the physical characteristics of the home made it suitable for year-round use. The ALJ also rejected Obus’s argument that the property was maintained for the use of another because the tenant had fully separate living quarters.

The Tax Tribunal agreed with the ALJ, ruling that Obus had a residential interest in the vacation home that was sufficient for a determination that the property was a permanent place of abode despite Obus’s infrequent stays in the home. The tribunal noted physical characteristics of the house that enabled it to be used year-round, like a full kitchen, heat, and hot water.

New York Supreme Court decision

The New York Court of Appeals, in February 2014, In John Gaied v. New York State Tax Appeals Tribunal, held that mere maintenance of a dwelling was not sufficient for it to qualify as a permanent place of abode and that the taxpayer must have a residential interest in the property. It ruled that a taxpayer domiciled in New Jersey who occasionally stayed with his parents in an apartment he provided them in a building he owned in New York did not have a permanent place of abode in the state.  The New York Court of Appeals looked to the purpose of statutory residency, noting that the statutory residency provisions were designed to tax people who are residents and that there must be some evidence that the dwelling was used as a residence by the taxpayer.

Citing the decision rendered by the Court of Appeals in Gaied, the Obus court concluded that, in order for a property to be a permanent place of abode, “there must be a showing that the taxpayer has a residential interest in the property, which is a fact-intensive inquiry.”  The court noted that an advisory opinion issued by the New York State Department of Taxation and Finance Commissioner stated that there must be some basis to conclude that the dwelling is used as the taxpayer’s residence for it to be considered a permanent place of abode.

“To properly determine the taxpayer’s residential interest, it is imperative to consider a variety of factors, including the nature and duration of the use,” the appellate court stated.

In this case, the court concluded that while there were certain objective facts that would support the tribunal’s determination, including Obus's free and continuous access to the house, the previously discussed factors established that the vacation home was not used as permanent place of abode. 

Mazars’ insight

In applying the Gaied court’s finding that the purpose of statutory residency provisions were designed to tax people who are residents, it is clear that the Obus’ extremely limited use of their vacation home did not place them in the category of New York residents.

The Obus court’s focus on the actual usage of the home, rather than its physical aspects will impact many residency determinations moving forward and is a welcome development. At the same time, residency cases in general are fact-intensive inquiries, so not all taxpayers with New York vacation homes can expect the same result if their actual usage of those properties can be differentiated by the state from the Obus’ pattern of use.

Please contact your Mazars professional for additional information.

The information provided here is for general guidance only, and does not constitute the provision of tax advice, accounting services, investment advice, legal advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers.