In an Advisory Opinion, TSB-A-12(4)I (N.Y.S. Dep’t of Tax. & Fin,. Aug. 28, 2012), the New York State Department of Taxation and Finance ruled that for New York income tax purposes, an individual’s acquisition of an ownership interest in a private, member-owned residential club in New York City did not constitute maintaining a permanent place of abode in New York.

The Petitioner is a domiciliary and resident of New Jersey. However, he regularly commutes to his workplace in New York City and is presumed to be present in New York for more than 183 days in each taxable year. Since New York law treats an individual as a resident of New York if he or she spends more than 183 days in New York and maintains a permanent place of abode in New York, the Petitioner inquired whether he would be considered to maintain a permanent place of abode in New York as a result of his ownership of a membership interest in the residential club (“The Club”).

The Club offers studio and one- and two-bedroom luxury apartments. Each member in The Club owns a one-eighth tenancy-in-common deeded fee interest in one of The Club’s residences. Members also own the furnishings and accessories in the residences. Membership in The Club entitles each member to a priority right to use a residence for 45 days per year. If some members do not use a residence for their 45 days, then other members may be able to use a residence for more than their 45 allotted priority days. Reservations for up to 7 days are given on a first-come, first-served basis, subject to the other members’ priority rights to use a residence for 45 days. An owner can reserve an available residence in a different Club residence category if no residences are available in the owner’s residence type.

Noting that the Petitioner’s right to use a residence in The Club was “circumscribed” by The Club’s policies and procedures, the Department concluded that the Petitioner did not have “free and continuous access” to a residence and thus would not be considered to maintain a permanent place of abode in New York for income tax purposes solely by reason of his ownership interest in The Club.

Additional Insights. The Advisory Opinion does not turn on how many days the individual might actually stay at The Club. Rather, the most important criterion was whether he would have “free and continuous access” to the place of abode. According to the New York State Tax Appeals Tribunal in Matter of John Gaied, DTA No. 821727 (N.Y.S. Tax App. Trib., June 16, 2011), which was appealed to the Appellate Division, Third Department, there is no requirement that an individual actually dwell in the abode, as long as he or she simply maintains it. Thus, in Gaied, the Tribunal found a permanent place of abode in New York where the individual had “unfettered access” to the premises, even though he only stayed overnight at the premises “on occasion.” Consistent with Gaied, the ruling in the Advisory Opinion turns on the Department’s finding that the individual did not have such access to a residence. If the individual in the Advisory Opinion had free and continuous access to a residence in The Club for 365 days a year, the ruling would have certainly come out the other way, even if he only used the residence for 45 days.