[Scukonaher]

New York real estate agents could see a big temporary increase in business as 'the rich' hurry to sell their New York second homes and Manhattan luxury apartments before the value falls too much.

http://online.wsj.com/article/SB1000...googlenews_wsj

Out-of-State Owners Could Face Tax Bill

By CRAIG KARMIN

Connecticut and New Jersey residents with a Hamptons summer cottage or a Manhattan pied-a-terre are about to get a nasty surprise: New York state wants more taxes from them.

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.

Tax experts and real estate brokers say this ruling could boost the tax bill for thousands of business executives who own New York City apartments they use only occasionally. It could also hurt sales in the Hamptons and New York's other vacation-home communities.

"People will think twice about spending any summer time in New York," says Robert Willens, a New York-based tax consultant. "The amount of tax they could be subjected to is likely to outweigh the benefit."

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.

The new ruling applies only to people who spend more than 183 days in New York, which would include many out-of-state commuters to the city. For years, New York law stated that these people 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.