New York tax practitioners often counsel individual clients on the steps to take and the tax consequences of a planned move from New York to another state. Often, for example, attorneys draft letters or memoranda explaining the tax issues and provide a checklist of steps to take to demonstrate that the change of residence is done properly. In contrast, individuals planning a move to New York from another state often do not have New York counsel to advise them. A recent Determination by an Administrative Law Judge (ALJ) of the Division of Tax Appeals, Matter of Michaels,1 demonstrates that failure to plan properly for a move to New York can be extremely costly.
Sale and Move
The situation in Michaels was straightforward. Glenna Michaels was a Connecticut resident who decided to move to New York. She had acquired her home in 1973. In 1996 she transferred ownership of the home to a trust she settled and for which she was the sole trustee.2 In 2003 she listed the house for sale. In 2004 she received an offer to purchase the house and retained a Connecticut attorney to negotiate a purchase and sale contract. On Sept. 14, 2004, a contract to sell the house for $14 million was executed, and the purchaser put up a deposit of 10 percent ($1.4 million). The parties executed a rider to the contract in October.
