USA – NEW YORK Trends and Developments Contributed by: John M Teitler, Nancy A Murphy and Constance E Shields, Teitler & Teitler LLP
New York City Tax Update Effective 1 July 2026, New York state enacted a pied- a-terre tax on non-primary residences in New York City valued at USD1 million. The tax was backed by both Zohran Mamdani, the mayor of New York City as of 1 January 2026, and New York Governor Kathy Hochul. The implementation of the tax is in its infancy and it is too early to speculate as to its financial and non-financial impact. High net individuals should con - sult with professionals how the pied-a-terre tax may impact them and consider ways to ameliorate it. Cross-border planning Planning for families residing in multiple jurisdictions around the world continues to be at the forefront of private wealth planning. There is an increasing trend for multi-national families to obtain US/NY advice as well as advice in other non-US jurisdictions. Impor - tantly, such advice is often inconsistent and requires counsel to co-ordinate tax advisers across a number of countries to consider the tax implications and plan - ning. The United States and New York impose an annual income tax on resident individuals, trusts and estates. For US federal tax purposes, an individual’s residence is based on citizenship, holding a “Green Card” or purely day count. For New York purposes, residence is generally determined based on an individual’s domi - cile/permanent abode. An estate is a New York resi - dent if the decedent was domiciled in New York at the
time of death. A trust is generally deemed to be a New York resident if the trust consists of property of a person domiciled in New York at the time of trans - fer or if the creator of the trust was domiciled in New York at the time the trust became irrevocable. US and New York residents are taxed on worldwide income. Non-resident individuals, trusts and estates are taxed on New York-sourced income only. Importantly, a resi - dent trust may not be subject to New York income tax if (i) all trustees are domiciled outside of New York, (ii) all the trust corpus is located outside of New York and (ii) there is no New York-sourced income. Even if an individual is considered a non-resident, the individual may remain subject to income tax on New York-sourced income. An individual who is a resident of New York at the individual’s death is subject to New York estate tax. A non-resident decedent may be sub - ject to estate tax on real or tangible personal property located in New York. The United States and New York permit a marital deduction, and exempt from gift and estate tax, prop - erty passing to a United States citizen spouse. A mari - tal deduction is not allowed for property passing to a non-citizen surviving spouse, unless such property is held in a trust that qualifies as a Qualified Domestic Trust. The marital deduction does not exempt from gift tax property passing to a non-United States citizen. The gift and estate tax exemption does not apply to unmarried couples.
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