Property taxes

Taxable value

How is the value of property assessed for tax purposes in your state? Which types of property are subject to tax?

In New York State, all real property is subject to:

  • real property tax;
  • special ad valorem levies; and
  • special assessments (unless exempt by statute).

 

Personal property is generally not subject to property tax. However, tangible personal property that is affixed or erected on real property is subject to property tax.

State rate

What is the state property tax rate?

There is no state property tax in New York State. The property tax is a local tax, raised and spent locally to finance local governments and public schools.

Local rates

What is the range of local property tax rates levied in your state?

The property tax rates are determined annually based on the budget of the locality imposing such tax. The tax rate is imposed on the assessed value of the real property, which may be lower than the fair market value of the property. New York State imposes constitutional limits on the percentage of the tax and the allowance for inflation.

Exemptions and deductions

What exemptions and deductions are available?

New York State law provides various exemptions from property tax that are based on a variety of factors, including ownership, location, or use of property (or a combination thereof). Available exemptions include:

  • charitable organizations;
  • government-owned property;
  • educational organizations; and
  • housing programs.
Filing requirements

What filing requirements and procedures apply?

Property taxes are assessed by the local jurisdiction imposing such tax and furnishing a bill to the property owner. The deadlines for when assessments are finalized and payments are due varies by each assessing district. In New York City, property tax bills are finalized in June and the payments must be made quarterly, although prepayments are allowed.

Real estate transfer tax

How is the transfer of real estate taxed in your state (including tax base, rates, exemptions, and filing formalities)?

New York State and New York City impose transfer taxes on the transfer of real property or an interest therein (each jurisdiction has a complex definition of “interest in real property,” which includes the transfer of a controlling interest in an entity that owns real property in such jurisdiction—certain transfers of interest may be aggregated for this purpose). Transfer tax is also due on the creation of certain leasehold interests. In New York State, the rate is generally $2 for every $500 of consideration or fraction thereof, and an additional tax of $1.25 for each $500 (or portion thereof) of consideration on transfers of:

  • residential property where consideration is in excess of $3 million; and
  • commercial property where consideration is in excess of $2 million. 

 

In addition, New York State imposes a mansion tax on transfers of residential real property with consideration in excess of $1 million at the rate of 1 percent of the consideration paid. An additional mansion tax is assessed for transfers of residential real property in New York City on a sliding scale for transfers where the consideration is in excess of $2 million, up to the highest tax rate of 3.9 per cent (inclusive of the 1 per cent) on transfers with consideration in excess of $25 million.

In September 2019, New York State adopted a new law requiring an LLC that is a grantor or grantee of residential real property to disclose on a transfer tax return all natural persons who own a membership interest, directly or indirectly, the in LLC. New York State budget for fiscal year 2022 expanded the scope of who can be held personally liable for the real property transfer tax to include officers, employees and managers. Additionally, now the grantee has a statutory cause of action to recover transfer tax paid by it from the grantor in cases where the grantor fails to pay the tax as required under the statute.

Other local jurisdictions also impose real estate transfer tax. For example, in the Peconic Bay region, there is a 2 per cent transfer tax (the basis of the tax varies depending on the township and whether the land has been improved).

In New York City, real property transfer tax applies when the consideration is greater than $25,000. Generally, for residential property, the rate is:

  • 1 per cent if the consideration is $500,000 or less; and
  • 1.425 per cent if the consideration is more than $500,000.

 

For all other types of property, the real property transfer tax is:

  • 1.425 per cent if the consideration is $500,000 or less; and
  • 2.625 per cent if the value is more than $500,000.

 

Excluding mansion tax—which is the primary obligation of the grantee—both New York State and New York City transfer taxes are primarily the responsibility of the grantor (although the grantee is secondary liable). Consideration for transfer tax purposes includes any obligations of the grantor (including transfer taxes) that are paid by the grantee.

Under the New York City Department of Finance’s current policies, where a purchaser purchases two or more residential units that have not been physically combined into a single residence before the transfer (a “bulk sale”), transfer tax will be imposed at the higher, non-residential rates.

New York State and New York City statutorily exempt certain entities from transfer tax, including the U.S. government and its agencies. However, if the other party is not exempt and the transaction is not exempt, the tax still applies and is paid by the other party. Further, both jurisdictions exempt certain transactions from transfer tax, including to the extent that the transfer represents a mere change in form with no change in the beneficial ownership and transfers to nominees. New York City also exempts transfers to and from charitable organizations.