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Hamptons Life

Mar 2, 2011 9:44 AMPublication: The East Hampton Press & The Southampton Press

Some Second Homeowners Might Be Taxed Twice Over

Mar 2, 2011 9:44 AM

The old adage “Never mix business with pleasure” seems particularly relevant amid the ongoing debate centered on the recent New York State Division of Tax Appeals decision, which states that if a homeowner has a primary residence in another state, but owns a permanent place of residency in New York and spends more than 183 days in New York, that homeowner is subject to paying state income tax.

The new decision does not affect those who own second homes but whose primary residences are already in New York State.

Though owning a second home has its share of ups and downs, financial and otherwise—even before the recent ruling was put into effect, some out-of-state-based second-home owners were still required to pay New York State income tax but at the non-resident rate—the newest legislation could have a negative ripple effect here on the East End.

According to New York State Assemblyman Fred W. Thiele Jr., more than 50 percent of the 62,000-plus homes on the South Fork are second homes. He added that, according to the U.S. Census, 58 percent of the approximately 40,000 homes east of the canal are second homes, and approximately 35 percent of the 22,000 homes west of the canal are second homes.

Though a philosophical debate over the legislation rages—is the mandate as fair as possible? What really constitutes permanent residency? Can someone be considered a permanent resident in two places?—the more pressing question is whether or not the current legislation will bring the revenue stream generated by second-home owners on the East End to a grinding halt.

During a telephone interview last Wednesday, Bridgehampton-based Saunders & Associates real estate broker Diane Saatchi gave her take on the mandate that is now on the books.

“While the premise is a reasonable way to tax the wealthy who use [our state’s] resources, it also may have a negative unintended consequence,” Ms. Saatchi said. “Connecticut and New Jersey residents ... who have or plan to purchase vacation homes in New York resort locations, would realize considerable additional income taxes and would thus be more likely to select other states for second or vacation homes.”

To illustrate the new legislation, on Tuesday, February 22, Mr. Thiele sent along an example about a court case brought by those whom he referred to as the “Barker” family. The family lived in Connecticut but had a vacation home on the South Fork. Their vacation home was used about five or six weekends per year, and though Mr. Barker worked in Manhattan, each night he would return to his home in Connecticut.

The Barkers paid New York State income tax, but at a non-resident rate. However, when the case was brought before a New York court, it was determined that the Barkers were responsible to pay the state’s income tax because between work and vacation Mr. Barker was in the state more than 183 days, and because he had what the court considered a “permanent” home in the state. Whether or not the home was a vacation property was of no matter.

New York State Tax Code states that a permanent place of abode is one that excludes “a camp or cottage which is suitable and used only for vacations.” And that is where conflicts arise: what of the large compounds on the East End that serve as a vacation home but could, conceptually, be lived in year-round without issue?

Attorney Jonathan Tarbet of Tarbet, Lester & Schoen, PLLC in Amagansett also weighed in on the matter.

“Well, it does not seem fair that New York can tax income earned in a different state just because someone owns a house here and works here. That income is already being taxed by the actual home state,” Mr. Tarbet said during a telephone interview last week. “I believe the 183 day rule needs to be defined as actually spending 183 nights in the state.”

Mr. Tarbet added, “As it stands now, the state believes if you work here during the day, that is enough. Where is the line? Eight hours? Would six hours be enough? What if you simply spent 10 minutes a day crossing through New York to get to your job in New Jersey from your home state? I don’t think anyone could complain if you slept here for 183 days and that is the rule everyone was operating by prior to this decision.”

At present, Mr. Thiele said he is trying to strike a balance between the old and new laws and is currently introducing legislation in the New York State Assembly that would add an additional requirement for income-tax residency. In a prepared statement released last Tuesday, he stated, “In addition to being in New York State for 183 days for business or personal reasons and owning a permanent residence, a person would also have to spend at least 120 days at the vacation home to be a resident for income tax purposes. Thus, residents could spend summers and weekends at their second home without inadvertently becoming a New York State tax resident.”

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Don't you dare tax rich people! Taxes are for the poor and working classes only.
By Noah Way (450), Southampton on Mar 1, 11 4:35 PM
1 member liked this comment
Wait a minute, you're saying the poor and middle class are paying taxes?

But that would mean the "educator" six figure salaries, guaranteed raises, and gold plated pensions actually take money away from poor and middle class families? That can't be. I thought all that money came from the magic money machine those heartless conservatives refuse to turn on.
By RealityFirst (597), Bridgehampton on Mar 1, 11 5:11 PM
Anyone else ever notice how it is the most uneducated, unsuccessful, and ignorant who hate teachers the most?
By razza5351 (551), East Hampton on Mar 6, 11 5:49 PM
1 member liked this comment
I love teachers. My sister is a teacher. Its teachers unions I hate
By joe hampton (3461), south hampton on Mar 9, 11 1:44 AM
2 members liked this comment
You can respect teachers and still criticize their overinflated salaries, time off and pensions - how many of us have the summers off and tenure and a union. Unfortunately anytime anyone says anything negative about teachers unions they are accused of hating children and teachers. Its time to reform the system, combine school districts and actually educate our children.
By sunshine (47), southampton on Mar 9, 11 7:26 PM
"But that would mean the "educator" six figure salaries, guaranteed raises, and gold plated pensions actually take money away from poor and middle class families? That can't be."

You're right. It can't be. And it isn't. Those people don't "take" money from anyone. They work and earn the money.
By btdt (449), water mill on Mar 6, 11 3:45 PM
2 members liked this comment
You know who funds teachers' pensions? Teachers!!
By razza5351 (551), East Hampton on Mar 6, 11 5:51 PM
wher is this mythical place called "Wall St" anyway... is it some vague undefined zone that anyone who can say 2 syllables or type 10 letters doesnt have to define and can bash without recourse .. ?
is this supposed place 'wall st' every bank in the US / is it FNMA in washington dc / is it the CALPERS fund / is it the WWF retirement fund / is it 50 cent the rapper playing with his millions / is it Facebook, Apple & Chipotle / is Wall Street EAST HAMPTON TWP 4.25% of 6/2028 ??

"safe ...more
By david h (405), southampton on Mar 7, 11 12:41 PM
Wall St. owns the government.

Wall St. feverishly created about 40 trillion dollars of faux "wealth", built upon the auspices of CSOs, CDOs, CSOs squared, and MBS, or mortgage backed securities.

The last one is the most fun of all, because it was basically taking the dream of home ownership, tidying it all up in Little Red Riding Hood's picnic basket, and then placing it on a craps table when Grandma went to Vegas on a gambling binge, all the while the guys who put these doomed ...more
Mar 7, 11 10:11 PM appended by Mr. Z
Wall St. owns the country. It is no longer a government of the People, by the People, and for the People, but a government of Wall Street, by Wall Street, and for Wall Street. The Great Common People of this country are slaves, and monopoly is the master. Money rules. Our laws are the output of a system which clothes rascals in robes, and honesty in rags. The Parties lie to us, and the Political Speakers mislead us. We were told two years ago, to go to work, and raise a big crop. That was all we needed. We went to work, and plowed, and planted. The rains fell, the sun shone, Nature smiled, and we raised the big crop that they told us to. And what came of it? Eight cent corn. Ten cent oats, two cent beef, and no price at all for butter and eggs. That's what came of it. Then the politicians said we suffered from overproduction. Overproduction? When ten thousand little children starve to death every year in the United States? "We" want money, land, and transportation. "We" want the abolition of the National Banks, and we want the power to make loans direct from the government. "We" want the accursed foreclosure system wiped out. We will stand by our homes, and stay by our firesides, by force if necessary. And, we WILL NOT pay our "debts" to the loan shark companies until the government pays it's debts to us. The PEOPLE are at bay. So let the bloodhounds of money BEWARE. ~ Anonymous Activist, 1890 A.D.
By Mr. Z (11847), North Sea on Mar 7, 11 10:11 PM
2 members liked this comment
And, for reference Cappie, most Wall St. personnel, at least 98 percent of them, could not explain to you just what a CSO, or CDO actually is, or how they actually work. And "Credit Default Swaps", that's another swindling, scamming ponzi scheme that they pretend is legal too.

They just push money, and paperwork around, without even understanding the risk themselves, and help themselves to a government handout so they don't have to lose when it all goes South. Makes the fine print so ...more
By Mr. Z (11847), North Sea on Mar 7, 11 10:26 PM
So if teachers FUND their pensions...let them pay state income tax after retirement instead of the rest of us picking up their tab!
By Irish114 (4), Hampton Bays on Mar 8, 11 9:09 AM
1 member liked this comment
nice writing and accurate enough - but you still dont explain what "wall street" is and by placing blame on "wall street" is just too broad & too vague ...

because Wall St is the Chase, BoA and Wells Fargo banks and mortgages we all have - its the insurance that we all use, its the 401s we contribute to and its the Police & Teacher pensions for our local service people. wall st funds our local schools and public services, keeps the restaruants running and blah blah blah

we all ...more
By david h (405), southampton on Mar 8, 11 9:14 AM
Irsish114, just curious, do you have a problem with multi-millionaires paying and effective tax rate of just 16% or do you reserve your hatred for middle class educators? Were you educated in public schools? Are your children?
By razza5351 (551), East Hampton on Mar 8, 11 10:00 AM
1 member liked this comment
You are correct that is surrounds us all on a regular basis. "Wall St." is the nexus of this country's "free market". It has become an easy, comfortable euphemism to describe who is to blame for the economic disasters of recent, as well as past history, because it IS the nexus of such things. It is not just any one thing, as it permeates our society, and the world. It is the nexus of past, as well as modern fiscal malfeasance, and a generator of not only inflation, but dollars which are the ...more
Mar 13, 11 10:54 AM appended by Mr. Z
http://en.wikipedia.org/wiki/Santa_Clara_County_v._Southern_Pacific_Railroad
By Mr. Z (11847), North Sea on Mar 8, 11 10:54 AM
3 members liked this comment
NICE!!!!!! now thats some substance!!
Mr Z has me WIDE AWAKE .. no zzzz is this & im re-reading it again.
27east should be paying us.

once again proves the Comments Section better than the articles.
By david h (405), southampton on Mar 8, 11 11:21 AM
Well, Google does pay me to write, and I just volunteer here.
By Mr. Z (11847), North Sea on Mar 8, 11 12:37 PM
Well said Mr. Z
By DJ9222 (85), southampton on Mar 8, 11 4:12 PM
You see, that's where you are missing some key facts, and points.

Wall St. personnel swap up private positions of employ, for public positions of employ more than teenagers swap spit. They are so intertwined, and they throw so much lobbying money at our legislature, they pretty much buy the laws, and deregulation which is/has been passed to suit their behavior.

They "broke no laws", because they helped to create the "law" which made what they do possible.

"When plunder ...more
Mar 8, 11 10:34 PM appended by Mr. Z
And, for the record, it would help if what laws were on the books were actually enforced. The SEC has dropped the ball, and failed to even question, let alone prosecute and malfeasance. To quote Lynn Turner, former Chief Accountant for the SEC, "I think you've got a wrong assumption — that we even have a law-enforcement agency when it comes to Wall Street,"
By Mr. Z (11847), North Sea on Mar 8, 11 10:34 PM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By joe hampton (3461), south hampton on Mar 9, 11 1:41 AM
1 member liked this comment
"The government has been the enabler". nice.

thank you. so much closer to the root of the evils. tossing around the word "wall st did this", "wall st did that", "wall st blah blah blah" its way too easy of a gripe, its low lying fruit > its a very weak argument because it really doesnt say anything.

... i mean there is a hot dog vendor on wall st thats been there 30 years -- is this all his fault?? is it the fruit shake maker, the bootleg dvd sellers on wall st, is it the off ...more
By david h (405), southampton on Mar 9, 11 9:15 AM
So, upon crunching, and digesting the above paragrahs, one simple, single phrase came to mind.

"No s**t, Sherlock."

How's that for brevity? Or, did I miss the mark, dh?
By Mr. Z (11847), North Sea on Mar 10, 11 7:18 PM
I see red ink a comin' down the line...
By Mr. Z (11847), North Sea on Mar 6, 11 8:25 PM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By joe hampton (3461), south hampton on Mar 9, 11 1:28 AM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By Mr. Z (11847), North Sea on Mar 9, 11 1:36 AM
Up kinda late arent you Z. What was Michael Moore a guest on Bill Maher tonight
Mar 9, 11 1:46 AM appended by joe hampton
Winning
By joe hampton (3461), south hampton on Mar 9, 11 1:46 AM
Funny.

Closed the store tonight, working on Google, and listening to some Kansas.
By Mr. Z (11847), North Sea on Mar 9, 11 1:49 AM
Kansas....wow almost for got about them....Carry on. I'm hitting the pillow
By joe hampton (3461), south hampton on Mar 9, 11 1:51 AM
We're only saying what's on our mind...
By Mr. Z (11847), North Sea on Mar 9, 11 1:52 AM
Hey, did y'all get off topic or what? Y'all should long for the good old days when the truely rich and mannered folks came out for Memorial Day, spent the summer and left on Labor Day. they paid their taxes and to my knowledge never compalined. Never sent their kids (oops, children) to our schools either.
The rich did have a few rules of their own though, never report their escapades in the Southampton Press. Even when the too drunk couldn't make the turn on Pond Lane and went right into the ...more
By summertime (589), summerfield fl on Mar 9, 11 4:04 PM
1 member liked this comment
Ofcourse I meant the income tax they ride on NY highways to and from Conn. so they owe$$$$$$$$$$.
By summertime (589), summerfield fl on Mar 9, 11 4:09 PM
When you really think about it, owning something so, lascivious... Wait, can I say that? L-A-S-C-I-V-O-U-S.

It's the "Hamptons". Don't they airbrush the real estate photos?

Not only are they occupying land, which most likely would be put to well better use, I don't know, maybe, GROWING FOOD? Let's say that since you are using a much larger portion of the planet's resources, you need to damn well "purchase" it from society. That's right folks, in case you missed it, we are ...more
Mar 11, 11 6:40 PM appended by Mr. Z
Sorry, L-A-S-C-I-V-I-O-U-S.
By Mr. Z (11847), North Sea on Mar 11, 11 6:40 PM
lewd (adj.)

1. inclined to, characterized by, or inciting to lust or lechery; lascivious.

2. obscene or indecent, as language or songs; salacious.

3. Obsolete .
a. low, ignorant, or vulgar.
b. base, vile, or wicked, especially of a person.
c. bad, worthless, or poor, especially of a thing.
By Mr. Z (11847), North Sea on Mar 12, 11 1:26 AM