Thanks to a new ruling, tenants in rent-regulated apartments should tread lightly when it comes to filing taxes, and making sure their apartment is really their primary residence, says Sam Himmelstein, a lawyer who represents residential and commercial tenants and tenant associations

"Just about every form of rent regulation requires that an apartment be the tenant’s primary residence—the laws don’t protect people who aren’t actually living in their apartments," Himmelstein explains. As we've written before, the general rule of thumb has been that you have to spend more than half of the year in an apartment to qualify, and legally, this is proven through your physical presence, as well as evidence like credit card receipts and travel dates showing that you've been in town.

"There were cases where tenants didn’t file NYC income taxes, had their driver's license in a different state, or applied for a mortgage on a vacation home claiming it as a primary residence for the tax break," says Himmelstein. "People did these things, and the courts essentially said that none of it necessarily meant an apartment was not your primary residence." Time spent on-site was, as a rule, the be-all and end-all.

That could all change, however, after a ruling this summer against a tenant of the Ansonia. The issue? The resident, who ran a business out of her apartment, claimed 100 percent of the rent as a tax deduction, even though she also resided in the apartment. "The court felt that she was precluded from saying her apartment was her primary residence, because she took this inconsistent position," Himmelstein explains. In other words, tempting though a potential tax break may be, you can't have your cake and eat it too.

Since the ruling is relatively recent, says Himmelstein, "We don't know how far and wide it's going to be applied." While tenants' rights attorneys see it as simply meaning a renter can't claim 100 percent of their rent as a business deduction, he says, landlords are already pushing for judgments that things like listing a vacation home as your primary residence or filing taxes outside of NYC should similarly disqualifying you from claiming a regulated apartment as your full-time home. 

"Right now, we're living in unknown territory," Himmelstein says, as the fallout of the decision plays out in the court system. "We're certainly cautioning clients about this, and advising them to correct the problem. If, for instance, you haven't filed New York City taxes, Himmelstein recommends filing amended returns, and taking whatever fiscal punishment that entails. It might be unpleasant, but it's a whole lot better than giving a landlord ammo to kick you out of a stabilized rental.


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Sam Himmelstein, Esq. represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts, and many other issues. He is a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan. To submit a question for this column, click here. To ask about a legal consultation, email Sam or call (212) 349-3000.

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