If a Connecticut domiciliary who spends over 183 days working in New York donates the use of his East Hampton house to a charity for three months, does he still maintain a permanent place of abode in New York for statutory residency purposes?

Plain-English summary

A Connecticut domiciliary owns a house in East Hampton, New York, where he spends three to five months a year with his family; the rest of the year he lives at his Connecticut residence, which is closer to his New York City job. He works in New York City and spends more than 183 days a year in New York State. That combination raises the question of "statutory residency" - under Tax Law § 605(b)(1)(B), a nondomiciliary who maintains a permanent place of abode in New York and spends more than 183 days there is taxed as a New York resident even without being domiciled there.

To avoid statutory residency, the individual planned to donate use of the East Hampton house to a local IRS-recognized 501(c)(3) charity for a continuous three-month period. He and the charity would sign a written lease under which the charity gets sole and exclusive use of the house for fund-raising and other charitable events; his phone would be disconnected, his clothing and personal effects removed, and he would have no access to or use of the house during the lease term, while the charity assumes responsibility for utilities and upkeep (his furniture would stay in place). He asked whether, under these facts, he would still be treated as maintaining a permanent place of abode in New York for the whole year.

The Department applied its regulation defining "permanent place of abode" (20 NYCRR 105.20(e)(1)) and its Nonresident Audit Guidelines, which treat a permanent place of abode as maintained "for substantially all of the taxable year" only if it is maintained for a period exceeding 11 months (subject to a case-by-case exception for abodes leased out repeatedly, year after year, on a recurring basis). Relying on two prior Tax Commission decisions, Matter of Hofler and Matter of Cunningham, which held that leasing a New York residence to unrelated tenants with exclusive occupancy rights means the owner no longer "maintains" it as a permanent place of abode, the Department concluded that the three-month charitable lease - which gives the charity sole and exclusive use and cuts off the individual's own access - breaks his maintenance of the East Hampton house as a permanent place of abode for that period.

Because the house would be maintained by the individual for only nine months of the year (not more than 11 months), he would not maintain a permanent place of abode in New York for substantially all of the taxable year, and therefore would not be a statutory resident under § 605(b)(1)(B), notwithstanding that he spends more than 183 days in New York. The Department cautioned, however, that this is a general rule, not an absolute one: an individual who leases out the same house for a month or more year after year on a recurring basis could still be found to maintain a permanent place of abode for substantially all of the taxable year.

What this means for you

Nondomiciliaries who spend over 183 days working in New York

If you own a New York house you use part of the year and you are otherwise at risk of statutory residency because you exceed 183 days in the state, temporarily relinquishing all access to and control of the house - through a genuine written lease giving someone else sole and exclusive use for a period of a month or more - can prevent the house from counting as a "permanent place of abode" for that period. The key facts here were the written lease, no access during the lease term, disconnected phone, removed personal effects, and the tenant (charity) bearing utilities and upkeep.

Accountants and tax professionals advising on statutory residency

Don't treat the "11-month" benchmark from the Nonresident Audit Guidelines as an absolute cutoff. The Department expressly warns that leasing out a residence for a month or more, year after year on a recurring basis, can still support a finding that the abode was maintained "for substantially all of the taxable year" even though the strict 11-month arithmetic would seem to say otherwise. A one-time, well-documented lease (as in this opinion) is treated differently than a recurring annual sublease pattern.

Common questions

Q: Does spending more than 183 days in New York automatically make a nondomiciliary a statutory resident?
A: No. Under Tax Law § 605(b)(1)(B) and 20 NYCRR 105.20(a)(2), statutory residency requires both maintaining a permanent place of abode in New York for substantially all of the taxable year and spending more than 183 days in the state. Both conditions must be met.

Q: What made the East Hampton house stop being a "permanent place of abode" for three months?
A: A written lease gave the charity sole and exclusive use of the house; the individual had no access during the lease term, disconnected his phone, and removed his clothing and personal effects, while the charity took over utilities and upkeep. Under Matter of Hofler and Matter of Cunningham, relinquishing occupancy rights this way means the owner no longer "maintains" the abode.

Q: What does "substantially all of the taxable year" mean?
A: Per the Department's Nonresident Audit Guidelines (July 25, 1997), it generally means a period exceeding 11 months. Since the house here was maintained only nine months of the year, that threshold was not met.

Q: Is the 11-month rule an absolute bright line?
A: No. The Department describes it as a general rule. If someone leases out the same residence for a month or more year after year on a recurring basis, the Department may still find the abode maintained for substantially all of the taxable year despite the arithmetic.

Q: Would the outcome differ if the individual kept a key or used the house even briefly during the three months?
A: The opinion turns on the individual having no access to or use of the house for any reason during the lease period. Retaining access or using the house during the charity's lease term would undercut the finding that he relinquished full control of the property.

Citations and references

• Tax Law § 605(b)(1)(B) - defines a nondomiciliary as a statutory resident if he or she maintains a permanent place of abode in New York and spends more than 183 days in the state
• 20 NYCRR 105.20(a) - defines "resident individual" for personal income tax purposes, including the statutory residency test
• 20 NYCRR 105.20(e)(1) - defines "permanent place of abode" and excludes abodes maintained only for a temporary purpose
• New York State Nonresident Audit Guidelines (July 25, 1997), p. 38 - explains that "substantially all of the taxable year" generally means a period exceeding 11 months, subject to a recurring-lease exception
• Matter of Hofler, Dec. St. Tax Commn., May 15, 1981, TSB-H-81-(162)-I - leasing a residence to unrelated tenants with exclusive occupancy rights means the owner no longer maintains a permanent place of abode
• Matter of Cunningham, Dec. St. Tax Commn., January 18, 1984, TSB-H-84-(14)-I - following Hofler on the same point

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_2004.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a04_4i.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-04(4)I
Income Tax
July 6, 2004

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I040115A

On January 15, 2004, a Petition for Advisory Opinion was received from Marcum &
Kliegman, LLP, c/o Carolyn Mazzenga, CPA, 130 Crossways Park Drive, Woodbury, New York
11797.
The issue raised by Petitioner, Marcum & Kliegman, LLP, is whether a nondomiciliary of
New York State maintains a permanent place of abode in New York State, under section
605(b)(1)(B) of the Tax Law, for the purpose of determining if an individual is considered a resident
of New York where the individual donates the use of his place of abode located in New York State
to a charitable organization for a three-month period.
Petitioner submits the following facts as the basis for this Advisory Opinion.
A Connecticut domiciliary owns a place of abode in East Hampton, New York, where he
spends three to five months a year with his family. The remainder of the year is spent at his
Connecticut residence. The individual works in New York City and spends more than 183 days
within New York State. The Connecticut residence is substantially closer to his job in New York
City than his East Hampton residence.
The individual plans to donate the use of his East Hampton house to a local charitable
organization for a continuous three-month period. The charity will use the house for various fund
raising activities or other events related to its charitable purposes. The individual and the charity
will execute a written lease for the use of the house for the three-month period. During the
three-month period, the individual will not have access to or use of the house for any reason. Also,
the individual’s phone will be disconnected and all clothing and other personal effects will be
removed. For the period, the charity will be assuming responsibility for all utilities and care of the
house. The individual’s furniture will remain in the house.
The charitable organization has been approved by the Internal Revenue Service as a
recognized not-for-profit organization under section 501(c)(3) of the Internal Revenue Code. The
individual is not related to the charitable organization.
Applicable law and regulations
Section 605(b)(1) of the Tax Law provides, in part:
Resident individual. A resident individual means an individual:
*

*

*

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(B) who is not domiciled in this state but maintains a permanent place of abode in
this state and spends in the aggregate more than one hundred eighty-three days of the taxable
year in this state, unless such individual is in active service in the armed forces of the United
States.
Section 105.20 of the Personal Income Tax Regulations (Regulations) defines a resident
individual and provides, in part:
(a) General. An individual may be a resident of New York State for personal income
tax purposes, and taxable as a resident, even though such individual would not be deemed
a resident for other purposes. As used in this Subchapter, the term resident individual
includes:
(1) all persons domiciled in New York State, subject to the exceptions set forth in
subdivision (b) of this section; and
(2) any individual (other than an individual in active service in the Armed Forces of
the United States) who is not domiciled in New York State, but who maintains a permanent
place of abode for substantially all of the taxable year (generally, the entire taxable year
disregarding small portions of such year) in New York State and spends in the aggregate
more than 183 days of the taxable year in New York State.
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*

*

(e) Permanent place of abode. (1) A permanent place of abode means a dwelling
place permanently maintained by the taxpayer, whether or not owned by such taxpayer, and
will generally include a dwelling place owned or leased by such taxpayer’s spouse.
However, a mere camp or cottage, which is suitable and used only for vacations, is not a
permanent place of abode. Furthermore, a barracks or any construction which does not
contain facilities ordinarily found in a dwelling, such as facilities for cooking, bathing, etc.,
will generally not be deemed a permanent place of abode. Also, a place of abode, whether
in New York State or elsewhere, is not deemed permanent if it is maintained only during a
temporary stay for the accomplishment of a particular purpose....
The Department of Taxation and Finance Income Tax Nonresident Audit Guidelines, dated
July 25, 1997, provides that for purposes of section 105.20(a) of the Regulations, the phrase
substantially all of the taxable year means:
For statutory resident purposes, an individual who maintains a permanent place of
abode in New York State, must maintain such abode "for substantially all of the taxable
year". For this purpose, substantially all the taxable year means a period exceeding 11
months. For example, an individual who acquires a permanent place of abode on
March 15th of the taxable year and spends 184 days in New York State would not be a

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statutory resident since the permanent place of abode was not maintained for substantially
the entire year. Similarly, if an individual maintains a permanent place of abode at the
beginning of the year but disposes of it on October 30th of the tax year, s/he too, would not
be a statutory resident despite spending over 183 days in New York. Since the individual
in each of the above examples did not maintain their permanent place of abode in New York
for more than 11 months, the individuals would not be considered residents of New York
State for any part of the year. Audit Division policy considers the "substantial part of a year"
rule to be a general rule rather than an absolute rule. For example, suppose a couple rents an
apartment in New York year after year, but each year they sublet the apartment to their son
for the month of December. Under the absolute rule, this couple would not be maintaining
a permanent place of abode in New York since they do not maintain it for more than 11
months of any particular year. However, the Division's position is that this couple should
properly be covered by the 183 day rule since they are maintaining the abode on a regular
basis.
Opinion
To be considered a resident of New York State pursuant to section 605(b)(1)(B) of the Tax
Law and section 105.20(a)(2) of the Regulations, a nondomiciliary individual must maintain a
permanent place of abode in New York for substantially all of the taxable year and spend in the
aggregate more than 183 days of the taxable year in New York.
The Department of Taxation and Finance Income Tax Nonresident Audit Guidelines dated
July 25, 1997, page 38, provides that for this purpose, the phrase substantially all of the taxable year
means a period exceeding 11 months. For example, an individual who acquires a permanent place
of abode on March 15th for the taxable year and spends 184 days in New York State would not be
a statutory resident since the permanent place of abode was not maintained for substantially the
entire taxable year. Similarly, if an individual maintains a permanent place of abode at the
beginning of the year but disposes of it on October 30th of the taxable year, the individual would not
be a statutory resident despite spending over 183 days in New York.
In Matter of Hofler, Dec St Tax Commn, May 15, 1981, TSB-H-81-(162)-I, the issue
addressed was whether the petitioners maintained a permanent place of abode within New York
State if they leased the property. In that case, the petitioners leased their residence located in
New York to unrelated individuals. During the terms of the leases, the petitioners did not have the
right to live in the house; that right vested in the tenants. In the Tax Commission’s view, the
petitioners did not maintain a permanent place of abode in New York State. See also, Matter of
Cunningham, Dec St Tax Commn, January 18, 1984, TSB-H-84-(14)-I.
In this case, it is undisputed that the individual will spend more than 183 days in New York
State and maintain the East Hampton residence for nine months during the year. The issue is

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whether the individual will maintain a permanent place of abode in New York for substantially all
of the taxable year. For a continuous three-month period, the East Hampton abode will be leased
to a charitable organization on a contractual basis. The individual will lease occupancy and use of
the residence to the charitable organization, and the charitable organization will assume
responsibility for all utilities and care of the house. For the duration of the lease agreement, the
individual will not have access to the residence.
The individual will relinquish full control of and access to the residence as a result of a
written lease with the charitable organization whereby it will have the sole and exclusive right to
use the property for a three-month period. Following Hofler, supra, and Cunningham, supra, the
East Hampton residence will not be deemed a permanent place of abode maintained by the
individual for the three month period. Therefore, the individual will not maintain a permanent place
of abode in New York State for substantially all of the taxable year. Accordingly, the individual will
not be considered a statutory resident of New York for purposes of section 605(b)(1)(B) of the Tax
Law and section 105.20(a)(2) of the Regulations.
It should be noted that for purposes of defining the phrase substantially all of the taxable
year, the Audit Guidelines consider the 11 month rule to be a general rule rather than an absolute
rule. Generally, if an individual leases his or her house to a third party for a period of one month
or more in the taxable year, the individual would not be deemed to maintain a permanent place of
abode for substantially all of the taxable year. However, even if the individual leases his or her
house for a period of one month or more, the individual may be deemed to maintain a permanent
place of abode for substantially all of the taxable year if the individual enters into such leases year
after year on a recurring basis.

DATED: July 6, 2004

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.