If You Are A Snowbird Considering A Domicile Change From New York To A Florida Domicile That May Trigger A New York Audit, Consider The Following:


Can One Snowbird Become A Floridian While The Other Remains A New Yorker ( a split domicile)? 




Kelly V. Zarcone. a member of the New York and Florida Bar.
Kelly V. Zarcone. a member of the New York and Florida Bar.




Most married couples have the same domicile. When a change of domicile occurs, they both change their domicile at the same time. But what about the situation where they have a home in New York and a home in Florida and the wife stays in Florida from mid-October until mid-May and is not present in New York for more than 183 days during a calendar year. On the other hand, the husband returns to New York one week a month while his wife stays in Florida and, of course, stays at the New York home when he does so. As a result, he is present in New York for more than 183 days in each calendar year, although his wife is not. Can they have a split domicile where one remains a New Yorker and the other becomes a Floridian?

The husband and wife file a joint federal income tax return.The husband files a resident New York tax return. The wife has no New York source income and files no New York tax return. The wife has substantial income from her stocks and bonds. The Florida home is titled in the wife’s name. She files a Declaration of Florida Domicile, registers to vote in Florida and has received a homestead exemption on her Florida home. As a result, there is a 3% cap on any increase in its assessment.  A New York auditor claims she must pay New York income taxes on the dividends and interest she receives because she has not effectively changed her domicile. The auditor points out that her husband retained a significant tie to a New York business and therefore she cannot change her domicile to Florida. The auditor cites the New York Tax Regulations that state:

“Husband and wife. Generally, the domicile of a husband and wife are the same. However, if they are separated in fact, they may each, under some circumstances, acquire their own separate domiciles even though there is no judgment or decree of separation. Where there is a judgment or decree of separation, a husband and wife may acquire their own separate domicile.” 20 NYCRR 105.20(i)(5)

Should this Regulation be changed? It would appear that it should be changed. A 2005 decision of the New York Court of Appeals recognizes that spouses each can elect their own domicile. Although the case involved an issue relating to a rent stabilized residence in New York City, its reasoning would appear to apply to a change of domicile by one spouse but not the other.  An analysis of the facts and quotations from the opinion may be helpful.

In 1995, the Lipsmans purchased an apartment in West Palm Beach. In 1999, the landlord served notice pursuant to the Rent Stabilization Code that it would not renew the Lipsmans’ lease because the premises were not being used as their primary residence and court proceedings ensued all the way up to the New York Court of Appeals. See Glenbriar Co. v. Lipsman, 5 N.Y.3d 388, 804 N.Y.S.2d 719 (2005).

Unlike the above example, it was the wife (Lillian) who claimed that she remained a New Yorker when her husband Lee became a Floridian and that she had a right to remain in the New York apartment.

The evidence showed that Lee had a Florida driver’s license and had received a Florida homestead exemption. Lee (who died in 2005) had his primary residence in Florida because of his emphysema. Lillian spent more than 183 days in New York, maintained New York bank accounts, retained family possessions (including furniture, china, photographs and clothing) and voted in New York.

The court determined that the Lipsmans were not using the apartment as their primary residence and ordered possession to the landlord. The Appellate Division reversed and the reversal was affirmed by the Appellate Division. The Court of Appeals did not review the case on its factual merits but affirmed on the ground that it was bound by the findings of the Appellate Division. But it specifically quoted with approval the following finding of the Appellate Division:

“Mrs. Lipsman has kept a consistent presence at the Bronx apartment, and  has continually maintained it as her primary residence. It is well settled  that husband and wife may establish two separate primary residences without penalty. The fact that the Lipsmans may have what has been referred to as a ‘conventional’ marriage does not deprive them of the right to declare separate primary residences under law.  “Further, as aptly stated in the Appellate Term decision, ‘this case presents a not uncommon “snowbird” situation’ where an elderly tenant purchases a Florida property for use during the winter and/or  for vacations. However, the decision to spend winters in Florida with her husband, should not, under the circumstances, have the corollary effect of causing Mrs. Lipsman to forfeit her principal residence of long standing in New York.” (11 AD3d 352, 353-354 [2004] [citations omitted].)

The landlord had pointed out that the husband (Lee) was the recipient of all the couple’s income and obtained a tax advantage by doing so, while Lillian claimed to reside primarily in New York to be able to stay in the apartment. Judge Rosenblatt, in a concurring opinion, directed his intention to instances similar to our example of a split domicile couple stating:

“An apartment should not be decontrolled merely because its tenants are retired and want to spend some of the colder months in a warmer climate. I write separate, however, to highlight the unseemly prospect of spouses living together yet claiming two separate primary residences (here, one in Riverdale and one in West Palm Beach) in order to take advantage of the mutually exclusive benefits of two jurisdictions. The Lipsmans concede that both Florida’s homestead exemption and New York City’s rent stabilization laws apply only to a primary residence. Here, the benefits of both were claimed. There are many bona fide arrangements in which one spouse can honestly take advantage of state’s laws and the other spouse the other state’s. Spouses need not share a primary residence, and legitimate arrangements of that kind should be recognized. The open possibility, however, of manipulation and gaming of the system—as suggested by this record—is dismaying.”

The Court of Appeals decision may prompt some couples to shift securities that had been subject to New York income taxes in the husband’s name to the wife’s name and thereby further reduce New York income taxes.

Although the judge may be dismayed at the result, it would appear to be perfectly legal for the spouse to shift the securities portfolio to Florida and thereby AVOID, not EVADE, New York taxation.

But remember, the Florida spouse must prove by clear and convincing evidence that he or she has changed her domicile to Florida and must be able to prove he or she was not present in New York State for more than 183 days.

Also remember, there may be other important considerations that are more important than saving taxes. For example, what if marital problems develop and the Florida spouse, as a result of the “tax maneuver,” has title to the Florida home and the entire stock portfolio? What if the “New York” spouse dies first, and the shift of the securities to the Florida spouse results in the loss of a step up in the tax basis of the securities portfolio that would otherwise have occurred.

Any steps to trigger a split domicile to achieve a tax advantage should only be taken after consulting with both legal counsel and an accountant to make sure that the “split” is worthwhile before “gaming” with the system and also to seek their opinion as to whether or not the Court of Appeals case cited above is likely to be construed by the New York Tax Department as overruling any prior concept that both spouses must have the same domicile unless they are actually separated. Hopefully, administrative law judges will not continue to take the same position that was expressed in the Alfus case (1995) W.L. 623253, DTA No. 812408 (October 17, 1995) when the judge concluded:

“The record does not establish that petitioner and her husband were separated in fact; therefore, since Albert Alfus was a domiciliary of New York (State and City) during 1986 and 1987, petitioner was a domiciliary of New York (State and City) as well during that period.”

Depending upon the “domicile” facts, it may be a better “game plan” for both spouses to become Floridians. The spouse who is in New York for more than 183 days files a resident income tax return because he or she is a statutory resident. Where the joint return shows that there is no or little income that escapes New York taxes, it is unlikely that the New York domicile auditor will question the change of domicile to Florida because New York State revenue is not an issue. In the meantime, because both are Floridians, there should be no impediment to obtaining a Florida homestead status for their Florida home and obtaining the advantages of the 3% “lid” on tax assessments. At a later date when neither spouse is in New York State for more than 183 days, if an audit does occur, it may be easier to show thatboth spouses had a consistent joint pattern of treating their Florida home as their domicile.

The Court of Appeals in the Lipsman case focuses on the term “primary residence.” This terminology is also found in the Internal Revenue Code provision and allows tax relief when a principal residence is sold and a gain on a transfer is realized. Where it is anticipated that the New York home may be sold at a later date at a substantial gain, it may be prudent for the real property to be transferred to the spouse who will remain in New York for at least 183 days each year so that Federal tax relief when the New York residence is sold may be available.

Florida appears to recognize split domicile between a “traditional” husband and wife (i.e., not living separate and apart). Thus, the Florida Supreme Court approved of a homestead exemption for a wife despite the fact that the husband was a non-domiciliary and they lived together harmoniously without a separation. See Judd v. Schooley, 158 So.2d 514 (Fla. 1963). See alsoBleasdell v. Department of Revenue, 2004 WL 1238355. Let’s take a closer look at that case.

In Judd, the Florida Supreme Court decided whether a married woman, living congenially with her husband who was domiciled elsewhere, may establish a residence in her separate property and thereby receive the tax benefits provided under the Homestead Law. For a number of years prior to 1958, Mrs. Judd and her husband owned certain real estate in Lee County, Florida. During this period, they were both residents of Florida. In December, 1958, Mr. Judd conveyed the property to his wife. At that time he announced the removal of his domicile from Lee County to Washington, D.C. where he also owned a home. He changed his domicile for business reasons to enable him to meet certain legal requirements to serve on the board of directors of a corporation in the District of Columbia. Mrs. Judd continued to occupy the Florida property. She also continued to vote in Lee County. She held a Florida driver’s license and maintained a Florida license tag on her automobile. The Judds continued to live together harmoniously as husband and wife and for extended periods of each year resided together in the home in Lee County. In 1961, Mrs. Judd applied for a homestead tax exemption.

The County Tax Assessor refused to allow the claimed exemption to Mrs. Judd stating “[H]usband claims domicile other than Florida. Domicile of wife follows that of husband unless set up for purpose of legal separation or divorce.” The County Commissioners upheld the decision of the Tax Assessor. There was an appeal to the District Court and the District Court reversed looking to the language of the Florida Constitution that states that every person who has legal title to real property in Florida and who resides thereon and in good faith makes the same his or her permanent home shall be entitled to an exemption.

The Florida Supreme Court, in further reviewing the issue, observed that too great an emphasis was made on the common law fiction that by marriage a woman’s identity is absorbed into that of her husband. It noted that this concept permeated the law for several hundred years and stemmed from the notion that upon marriage, a woman lost her independence as a legal entity, her property immediately came under the control of her husband, and he was entitled to her earnings, if any, and she was in all respects subject to his control and domination. The Florida Supreme Court quoted Milton as expressed in Paradise Lost, Book X, Line 195: “And to thy husband’s will thine shall submit; he over thee shall rule.” The Court noted that we have traveled a long way since Milton as every husband knows and deemed it unnecessary to cloud the law with an outmoded fiction that has been dispelled by the light of present day results. The Court noted that, under the Homestead Law, Florida citizenship was not required and that all that was required was that the property owner reside in the property and in good faith make the same his or her permanent home and the Legislature made it clear that permanent residence should not be construed so as to require a continuous physical residence on the property. The Supreme Court held that by the Florida statutes residence or permanent residence means only that place “which the person claiming the exemption may rightfully and in good faith call his home to the exclusion of all other places . . .” The Court did notice that it is essential that the residence be established in good faith.

But what about the situation where both spouses are present in New York State for more than 183 days during the calendar year — can one or both spouses declare a Florida domicile and be eligible for a Florida homestead exemption and the 3% lid on increases in the annual assessment?

As far as New York is concerned, both will be considered statutory residents of New York and pay the same income taxes they would pay if they had not changed their domicile. Therefore, there would be no financial benefit to the New York Department of Taxation & Finance to attack the change of domicile. But will Florida recognize the change of domicile and allow the homestead exemption?

There is no rule in Florida that a Floridian must be present in Florida for more than 183 days each year in order to be eligible for a Florida homestead exemption or to file a Declaration of Domicile or to vote.

In Session 8, we mentioned that most Florida counties are quite liberal in granting homestead status, but that any false statement might later result in substantial payments and even fines. There also may be criminal charges especially if you continue to be on the voting rolls of New York and Florida or continue to receive the benefit of a STAR exemption on the New York home while also claiming benefits as a domiciliary in Florida.

It is only in those situations where a spouse truly considers Florida to be a permanent residence and “home” that any attempt should be made to apply for a homestead status where it is anticipated that the spouse will be present in New York for more that 183 days a year. In such situations the spouse should execute a Florida Will and take other steps to evidence an intention to be a Florida domiciliary and do nothing in New York that indicates a contrary intention.

Prior to the Lipsman decision, there was a concern that the snowbird split domicile arrangement was not viable because of the regulation quoted above. However, after the Lipsman decision, it appeared  that the regulation  was outdated and in due course would be repealed. This view seemed to be shared by the New York Department of Taxation and Finance when it stated in its Nonresident Audit Guideline:

“Having stressed the importance of family in the evaluation of domicile, it needs to be pointed out that spouses can have different domiciles.” The guidlines cite In Matter of Martin Erdman & Joan Keyloun, DTA No. 810741. In that case the Tax Appeals Tribunal reversed the ALJ in ruling that a wife had not become a domiciliary of New York by marrying a New York domiciliary. The Tribunal accepted her claim that she had changed her domicile to Florida long before their marriage and that her contacts with New York were minimal. At the same time, the Tribunal affirmed the ALJ in holding that the husband remained a New York domiciliary.

On July 21, 2016 the New York Tax Appeals Tribunal issued a 38 page decision in Matter of Campaniello,DTA 825354 that may have revitalized the regulation that appeared to be outdated. Stay tuned!


BEFORE PROCEEDING WITH A “SPLIT” DOMICILE CHANGE, CONSULT WITH YOUR PROFESSIONAL ADVISOR. Note that the audio was made before the Campaniello case was decided and therefore does not take into account its ramifications.