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New York State Could Kill the Real Estate Market in the US

The State of New York has found a way to help raise money for the tax deficit they are facing.  If you own a second home or a vacation home in New York State, you are now subject to state income tax on your income up to 35%. Can you afford that?

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.

Income that now could be taxed by New York includes capital gains, dividends and securities, attorneys said. In the event of an audit, these homeowners would also be responsible for back taxes, plus interest and penalties, as a result of their New York property.

Judge Joseph Pinto, a New York administrative law judge, made the novel ruling in a 2009 case that was affirmed last month on appeal by the New York state tax appeals tribunal. Mr. Pinto seized on what is meant by a permanent residence, which is the benchmark for whether all, or just the in-state portion, of an individuals income is subject to New York state tax.


Judge Pinto ruled that the couple's Long Island vacation home qualifies under the law as a permanent abode because it was suitable for living year-round--whether or not the couple actually stayed in the home wasn't relevant. Under the ruling, if an owner doesn't spend a single a day in a home it could still count toward a permanent residence.

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.


In defining a "permanent place of abode," New York tax code specifically excludes "a mere camp or cottage, which is suitable and used only for vacations." New York tax experts say the new ruling is the first they recall that counts summer homes as permanent residences.

Is your state next? This law MUST be stopped in it’s tracks. It will KILL the real estate market in New Your and it will KILL the real estate market in your area if it is allowed to stand. Call your state rep and tell them “Not in our Sate”...

Just think, you live in Texas and you have a vacation home in the Hampton's. You are now subject to a state income tax from New York of up to 35% of ALL of your earnings.... Just because you own a vacation home in New York State...

To end on a positive note, real estate in New York just got cheaper.... Oh, that’s not a good thing is it????

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Whether you're interested in buying your first home, your next home, or just want to know more about home-ownership in general, I encourage you to check out a couple of great online resources: http://www.texasrealestate.com/ or http://www.har.com/. And for all of your Pearland, TX and Northern Brazoria and Galveston County real estate needs, please visit my site at: http://www.danfrankrealty.com. All of these sites offer tons of useful, real estate-related information geared specifically for Texans.


Remember, Danny Frank is a local Pearland, TX Real Estate expert! You can see my entire blog
at:  http://www.pearlandrealtyblog.com

 

 

 
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Comment balloon 3 commentsDanny Frank • February 22 2011 02:47PM

Comments

Danny,

Wow, wow. wow. If this law flies and others follow, it will have sweeping ramifications.

Florida does not have State income tax. Will they instead invent something for thhis particular situation?

Posted by Jon Zolsky, Daytona Beach, FL, Buy Daytona condos for heavenly good prices (Daytona Condo Realty, 386-405-4408) over 7 years ago

Wow!  these kinds of laws are just insane!  Must be repealed!

Posted by Ricki Eichler McCallum, Broker,GRI,ABR, - Your Coastal Bend Home Source (CastNet Realty) over 7 years ago

If I was considering buying a second home in New York, this would kill it for me.  Definitely. 

Posted by 1 ~Judi & Don Barrett & Chassy Eastep - Integrity, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) over 7 years ago

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