As the poet Edgar Guest tells us, “It takes a heap o’ livin’ just to make a house a home,” or, in a case just decided by the New York Court of Appeals, to at least make it a “permanent place of abode.”

In a unanimous decision reversing a split decision by the Appellate Division, which had affirmed a split decision by the New York State Tax Appeals Tribunal, New York’s Court of Appeals (its highest court) ruled in favor of the taxpayer. It held that John Gaied, a New Jersey resident, was not a statutory New York resident merely due to his ownership of a multifamily dwelling on Staten Island, N.Y., where he also owned an automotive service and repair business.

Gaied purchased the dwelling as an investment and as a place for his elderly parents to live. His parents lived in the first-floor apartment, and Gaied rented out the other two apartments. Although he stayed at his parents’ apartment on occasion, he did so only at his parents’ request to attend to their medical needs. On these occasions, he slept on a couch, and never lived at the apartment nor did he keep any clothing or other personal effects there.

During the years 2001 to 2003, he filed nonresident income tax returns in New York. After an audit, the Department of Taxation and Finance issued a Notice of Deficiency indicating that he owed an additional $253,062 in New York State and City income taxes, plus interest. The Department determined that he was a “statutory resident” of New York under Tax Law section 605(b)(1)(B) because he spent over 183 days in New York City and maintained a “permanent place of abode” at the Staten Island property.

Gaied conceded that he spent more than 183 days in New York City during each year at issue but challenged the determination that he maintained a permanent place of abode at the Staten Island property.

The Tax Appeals Tribunal held that “where a taxpayer has a property right to the subject premises, it is neither necessary nor appropriate to look beyond the physical aspects of the dwelling to inquire into the taxpayers’ subjective use of the premises.” It concluded that there is “no requirement that the petitioner actually dwell in the abode, but simply that he maintain it.”

The Court of Appeals reversed, holding that “in order for an individual to qualify as a statutory resident, there must be some basis to conclude that the dwelling was utilized as the taxpayer’s residence.”

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