Own A Second Home In New York? Prepare For A Higher Tax Bill


The state of New York seems to have found a novel way to raise the revenue needed to close its substantial budget gap: tax people who don’t live there.

A New York court ruled last month that all income earned by a New Canaan, Conn., couple is subject to New York state taxes because they own a summer home on Long Island they used only a few times a year. They have been hit with an additional tax bill of $1.06 million.
Tax experts and real estate brokers say this ruling could boost the tax bill for thousands of business executives who own New York City apartments they use only occasionally. It could also hurt sales in the Hamptons and New York’s other vacation-home communities.
“People will think twice about spending any summer time in New York,” says Robert Willens, a New York-based tax consultant. “The amount of tax they could be subjected to is likely to outweigh the benefit.”
A spokesman for the state Taxation Department issued a written statement that said it was “pleased” with the decision. “However, these cases are fact-intensive and as such each case stands on its own specific fact pattern,” it said.
For years, New York law stated that residents of another state who spend more than 183 days a year in New York have to pay taxes on any income they make in this state. But they generally haven’t had to pay New York taxes on income they make outside of the state or on their spouses’ income if they work elsewhere.
Under the recent ruling, this might change for many out-of-state residents who own vacation homes or apartments here. In effect, it reinterprets what counts as a permanent residence.

Read more: http://www.businessinsider.com/own-a-second-home-in-new-york-prepare-for-a-higher-tax-bill-2011-2#ixzz1FPFYm27v

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