New York State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in New York, with full citations and the original source on every page.
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My corporation and two related partnerships (with overlapping but not identical family ownership) plan to swap parcels of undeveloped land, with cash making up any difference in value. Does this land swap trigger New York's Real Property Transfer Gains Tax, and does the mere-change-of-identity exemption help since the same family owns pieces of all three entities?
The exchange is a taxable transfer on both sides (each party is a transferor of what it gives up), but each side gets a PARTIAL mere-change-of-identity exemption to the extent the exchange doesn't act…
As bankruptcy trustee for 68 limited partnerships, I'm selling their real estate free and clear of liens under court order, with liens attaching instead to the sale proceeds. Depending on whether the buyer is a stranger to the mortgage, partially assumes it, or is the mortgage-holder itself credit-bidding at a bankruptcy auction, how is 'consideration' calculated for New York's Real Property Transfer Gains Tax in each scenario?
Consideration is calculated differently in each of the three scenarios -- the price actually paid if the buyer doesn't touch the mortgage, price paid plus the assumed portion if the buyer partially as…
My client (a tenant under a nearly-49-year lease) is negotiating a lease amendment with two parts: one clause simply clarifies the tenant's existing right of first refusal if the landlord decides to sell, and a second clause forces the landlord to offer the tenant the property once a large enough third-party cash offer comes in, even if the landlord doesn't want to sell. Does either part of this amendment turn the lease into a taxable 'transfer of real property' under New York's Real Property Transfer Gains Tax?
The two clauses get opposite answers -- the ordinary right-of-first-refusal clause isn't a taxable transfer, but the clause forcing the landlord to offer the tenant the property once a qualifying thir…
We entered a purchase-and-assumption agreement with the Resolution Trust Corporation, acting as receiver for a failed savings bank, giving us options to acquire the failed bank's leased and owned New York real estate. Since the RTC is a federal agency handling a bank failure, are its transfers of that real estate to us exempt from New York's Real Property Transfer Gains Tax?
Yes, exempt -- because the Resolution Trust Corporation is a federal agency and instrumentality of the United States, any transfer of real property interests it makes as receiver is exempt from New Yo…
As sole shareholder of the company that owns and operates my newspaper, I plan to contribute the newspaper's real estate (still subject to a $25 million mortgage) into the company for no additional consideration, to help stabilize the business -- and separately, we're planning to set up an employee stock ownership plan that will eventually hold 20% of the company's stock. Does either step trigger New York's Real Property Transfer Gains Tax?
Neither step triggers the gains tax -- the real estate contribution is an exempt mere change of identity, and the 20% ESOP stock issuance never reaches the 50% controlling-interest threshold in the fi…
Two partners bought real estate through their partnership, later sold a one-third interest to a third partner, and now want to buy that interest back at a higher price before selling everything (or their whole partnership interest) to a new buyer. Depending on WHEN each of these steps happens relative to a mid-transaction regulatory change, what 'original purchase price' can the original two partners use to calculate their gain for New York's Real Property Transfer Gains Tax?
The answer turns entirely on precise timing relative to a November 7, 1990 regulatory amendment -- but under every timing scenario the Department analyzed, A and B's original purchase price on a sale …
Our bank needs to reclassify all our non-voting preferred stock into voting common stock to satisfy new federal regulatory capital requirements. After the reclassification, the group of former preferred stockholders as a whole will end up owning more than 50% of our voting stock, even though no single stockholder crosses that line and none of us are acting together as a group. Does this trigger New York's controlling-interest transfer tax or gains tax rules?
Not taxable. CrossLand Savings, FSB needed to reclassify its Series A and Series B Preferred Stock into voting Common Stock to satisfy new federal regulatory capital requirements imposed by FIRREA. Af…
A deceased cooperative sponsor sold some apartments himself before he died, and bequeathed the remaining eight units in his will -- one each to three unrelated people, and five (as tenants in common) to his parents and brother. Is the bequest itself a taxable transfer, does it get combined with the sponsor's own pre-death sales for the $1 million gains-tax threshold, and are the family members' later individual sales aggregated with each other or with the unrelated beneficiaries' sales?
The bequest itself isn't a taxable transfer at all, and the beneficiaries' later individual sales are generally NOT aggregated with the sponsor's own prior sales, or with each other's, unless the fami…
We're the ground lessors under a roughly 60-year cooperative housing lease signed in 1970, before New York's Real Property Transfer Gains Tax even existed. The lessee disputes how the rent-escalation formula should work and, to settle the dispute without litigation, we're negotiating changes to the lease's rent calculation and adding a side partnership arrangement for some commercial space. Does modifying this old lease risk losing its 'grandfathered' pre-1983 status and triggering the gains tax on what's effectively a 60-year lease?
The lease keeps its pre-1983 grandfathered exemption -- because the negotiated changes clarified the parties' original intent about the rent formula (and actually LOWERED, not raised, the rent) rather…
Our corporation, owned 50/50 by two shareholder groups who now want to go their separate ways, is planning a federal tax-free 'split-up' or 'split-off' reorganization: dividing our real estate between two new subsidiaries, then distributing all the stock of one subsidiary to each shareholder group (in a split-up, with our original corporation then liquidating; or, in a split-off, exchanging one group's original shares for the new subsidiary's shares). Does any step of this trigger New York's Real Property Transfer Gains Tax?
The initial division of real property into wholly-owned subsidiaries is exempt as a mere change of identity, but distributing the subsidiaries' stock out to the separate shareholder groups is a taxabl…
Our property has a title defect that makes it currently unsellable. We signed a contingent contract with one company to buy it IF we ever clear title within 15 years, at an escalating price, and simultaneously leased the property to a related company at fair rent for 5 years (with renewal options). The contingent purchase contract itself says it becomes null and void unless the state confirms this whole arrangement doesn't trigger the Real Property Transfer Gains Tax. Does it?
Yes, taxable -- a contingent purchase agreement coupled with a simultaneous lease functions the same as a lease coupled with a purchase option, which is always taxable regardless of the lease's own te…
We operate a famous oceanfront resort under New York's Innkeepers Law as a transient lodging facility, not a residence -- our rooms mostly lack kitchens, and we're contractually required to keep operating as a hotel for decades. We're selling 51-week annual time-share interests in the resort as cooperative shares to the public, with no single buyer ever acquiring a controlling interest. Since we're a hotel, not a residential cooperative, are these timeshare sales exempt from New York's Real Property Transfer Gains Tax?
Taxable -- selling cooperative timeshare shares triggers the gains tax on cooperative-plan transfers regardless of whether any single buyer ever gets a controlling interest, and regardless of whether …
Our partnership's founding families disputed a 1977 agreement to divide up jointly-owned properties, litigated for years, and finally settled in 1988 with a different split than the 1977 agreement's terms implied. Can the 1988 settlement's property distribution still qualify as exempt from New York's Real Property Transfer Gains Tax as a transfer made pursuant to a written contract signed before the tax existed in 1983?
No -- the distribution is taxable, because the 1977 agreement never manifested the kind of binding commitment the grandfather exemption requires, and the eventual 1988 settlement changed the property …
As a developer, I acquired and re-subdivided an entire tract of land into a plaza, and I've been selling off individual parcels to different buyers over several years, with each sale under $1 million on its own. I'm willing to swear that I'm not selling this way to dodge the gains tax. Does my sworn no-avoidance-intent statement let me avoid aggregating all these sales together for New York's Real Property Transfer Gains Tax's $1 million threshold?
No -- the sworn statement doesn't save the taxpayer here, because the facts themselves (a developer acquiring, re-subdividing, and progressively selling off a single tract) show a plan or agreement to…
Nine months after getting an advisory opinion on our proposed NBC/Rockefeller Center restructuring based on a preliminary term sheet, we've now finalized and signed all thirteen actual transaction documents (leases, purchase option agreement, condominium declaration, IDA deeds, overlease, and more). Does the Department's earlier gains-tax analysis still hold now that we're submitting the final, executed paperwork?
Yes -- reviewing the complete, finalized set of thirteen signed transaction documents, the Department reached the identical conclusions it gave nine months earlier on the preliminary term sheet: only …
My 1958 lease, grandfathered because it predates New York's Real Property Transfer Gains Tax, already contains two 30-year renewal options with a rent formula built in. The tenant is now exercising the first renewal, and we're negotiating the exact renewal rent (per the lease's own formula) plus a brand-new, THIRD 30-year renewal option we're independently agreeing to grant, on similar terms. Does either step -- setting the renewal rent, or granting the new independent option -- break the lease's grandfathered status?
Neither step is taxable -- setting the rent for the already-provided-for first renewal option isn't a substantial modification, and the brand-new additional renewal option is analyzed completely indep…
We're restructuring NBC's occupancy of Rockefeller Center through a complex package: assigning an old RCA lease to NBC (its GE sibling), amending and consolidating existing leases, creating a brand-new 37-year Tower Lease, a separate Studio-RCA West Lease with an eventual purchase option, additional-space leasing rights, and an Industrial Development Agency sale-leaseback for tax benefits. Which pieces of this multi-part transaction trigger New York's Real Property Transfer Gains Tax?
Out of the entire multi-part restructuring, only ONE piece is taxable: the Studio-RCA West Lease, because it's coupled with a future purchase option, with tax due -- based on the present value of net …
I own two of four contiguous parcels individually, and my wholly-owned corporation owns the other two. All four are being sold together to one buyer under a single contract for $1.2 million, with consideration allocated separately to each parcel so that neither I nor my corporation would individually receive $1 million or more. Are my corporation and I treated as separate transferors for New York's Real Property Transfer Gains Tax, so our considerations aren't aggregated?
No -- because John Malasky owned 100% of John Malasky, Inc., he and the corporation are treated as a SINGLE transferor under the gains tax's 'look-through' principle, so their combined consideration m…
My shopping center lease, originally signed in the 1950s for 75 years, has about 37 years left. We're negotiating to add roughly 30 more years to the term along with a substantial rent increase, but with no purchase option. Does extending an already-long-running lease trigger New York's Real Property Transfer Gains Tax as if we were creating a brand-new 49-plus-year lease?
Yes, taxable -- extending and substantially modifying an existing lease creates a brand-new leasehold for gains-tax purposes, with its term measured starting from the modification's effective date, no…
My partnership built an office building at 126 East 56th Street in two stages, finishing the base building in 1983 and completing individual tenant floor build-outs through 1985. Can I allocate construction-period interest, real property taxes, insurance, security, and specifically identified indirect project costs to each floor by square footage, for gains-tax original-purchase-price purposes?
Yes, as long as it's an equitable allocation. Tower 56 Partners, a New York partnership that built and leased an office building at 126 East 56th Street in Manhattan, financed by National Bank of Nort…
My partnership is constructing an office building at 33 Whitehall Street, with the base building completed in a first stage and individual floors built out for tenants in a second, ongoing stage running into 1989. Can I allocate construction-period interest, real property taxes, insurance, security, and specifically identified indirect project costs to each floor by square footage, for gains-tax original-purchase-price purposes?
Yes, as long as it's an equitable allocation. Broad Financial Center Partners, a New York partnership building an office building at 33 Whitehall Street in lower Manhattan, financed first by Manufactu…
My partnership is constructing an office building at 32 Old Slip in lower Manhattan, with the base building finishing in phases (elevator banks completed on different dates) and individual floors being built out for tenants as leases are signed. Can I allocate construction-period interest, real property taxes, insurance, security, and specifically identified indirect project costs to each floor by square footage, for gains-tax original-purchase-price purposes?
Yes, as long as it's an equitable allocation. Assay Partners, a New York partnership building an office building at 32 Old Slip in Manhattan financed by Bankers Trust Company, was completing the build…
I'm constructing an office building floor-by-floor as tenants sign leases, rather than all at once. For gains-tax purposes, can I allocate construction-period interest, real property taxes, insurance, security, and specifically identified indirect project costs to each floor in proportion to that floor's share of the building's total square footage, counting costs only through the date each floor's construction is finished?
Yes, as long as it's an equitable allocation. 45 Broadway Atrium Partners was constructing an office building at 45 Broadway in Manhattan in two stages -- a first stage completing the foundation, shel…
I'm selling my 45% shareholder interest in a corporation whose only asset is New York real property, as part of a deal where the buyer will also acquire another shareholder's 50% interest (making the buyer's total acquisition a controlling interest). The price I'm actually getting for my shares is nominal, but the buyer is also assuming and satisfying a lot of debt. Is the 'consideration' for gains-tax purposes just the cash and debt relief I personally receive, or something else?
Something else -- consideration is the apportioned fair market value of the underlying real property, not the price actually paid for the shares. Miller Buckley Overseas Limited (MBO), a 45% sharehold…
I'm selling my interest in a joint venture that owns interests in shopping centers. Because a contribution I was supposed to make to the venture never happened, my actual share of the venture's profits and capital ended up below 50%. Does selling that sub-50% interest trigger New York's Real Property Transfer Gains Tax as an acquisition of a 'controlling interest' in a real-property-holding entity?
No. Interstate Properties held an interest in a joint venture (with Pyramid Company of Utica) that was originally structured around three shopping centers, but because Interstate never contributed one…
My company plans to transfer real property to its wholly-owned subsidiary, and then transfer all of that subsidiary's stock up to its own parent corporation. Are both transfers exempt from New York's Real Property Transfer Gains Tax as a mere change of form?
Yes. Philip Morris Incorporated planned to transfer New York real property (in Cayuga County) to its wholly-owned subsidiary Miller Brewing Company, and then separately transfer all of its Miller Brew…
My late husband's cooperative apartment shares passed under his will into a testamentary trust, of which I'm co-trustee. If the trust now sells the co-op shares, does the personal-residence exemption from New York's Real Property Transfer Gains Tax apply the same way it would if the estate itself were selling?
Not automatically -- it depends on who is living there. Dasha A. Epstein, co-trustee of a testamentary trust holding her late husband Harry D. Epstein's cooperative apartment shares (his former primar…
My corporation owns New York real estate. Before it liquidates under IRC § 333, its shareholders will first contribute all their stock to a new limited partnership pro rata to their existing ownership (some getting general-partner interests, some only limited-partner interests), and the corporation will then distribute all its assets to that partnership and dissolve. Does this trigger New York's Real Property Transfer Gains Tax?
No. B. Bros. Realty Corporation's proposed plan -- shareholders contributing all their stock to a newly formed limited partnership in exchange for pro rata partnership interests, followed by B. Bros.'…
My 1982 lease and companion interim lease with a tenant, both signed before the gains tax's March 28, 1983 grandfather cutoff, contain purchase options and have been amended several times since. We now want to fix a firm commencement date for the main lease and separately convert the interim lease into essentially a full net lease with the purchase option removed, plus have the tenant take over certain operating responsibilities in exchange for a lump-sum payment. Do any of these amendments cause us to lose the pre-1983 grandfather exemption, and does the lump-sum payment or the interim-lease conversion itself count as a taxable transfer?
It depends on which amendment. 52 Habitat Co., landlord of a Manhattan office building under a 1982 Net Lease and companion Interim Lease with Morgan Guaranty Trust Company (both containing purchase o…
I own three contiguous residential buildings that are legally, structurally, and operationally separate (separate systems, entrances, tax lots, and registrations), and I'm selling all three to the same buyer by separate deeds. Do I have to add the sale prices together when testing against the $1 million exemption threshold for New York's Real Property Transfer Gains Tax, or does each building's price stand on its own because the buildings are legally distinct?
Aggregated -- because they were used for the same purpose. 340 West 89th Corporation owned three contiguous residential rental buildings (345, 347, and 349 West 87th Street) that were legally and phys…
We're structuring a complex sale-and-leaseback of a Manhattan property: the seller sells the land and building to a master lessor and separately sells the remainder interest in the land to another buyer, and then leases the whole thing back through a chain of a master lease, a sublease back to the seller, and a possible future ground lease -- with purchase options built in at multiple levels. Which pieces of this get taxed under the Real Property Transfer Gains Tax, and how is 'consideration' calculated for the leases themselves?
The Legislature intended the gains tax to apply to a simultaneous sale-and-leaseback only on the SALE aspect, not to tax the leaseback itself as a second full transfer. Metromedia, Inc. sold its Manha…
My corporation, whose sole shareholder is a partnership, owns real property worth over $1 million. If the corporation liquidates and conveys title to that real property directly to its sole shareholder, is that conveyance a taxable transfer under New York's Real Property Transfer Gains Tax?
No. Jefferson Highland Corporation asked whether conveying title to its real property (valued over $1 million) to its sole shareholder -- a partnership -- upon the corporation's liquidation would be a…
My company owns vacant land and will ground-lease it to an industrial development agency (IDA), which will sublease it back to me as its construction agent, financed by an IDA industrial revenue bond that I effectively repay through rent equal to the bond's debt service. Neither the IDA nor I have a purchase option, but title to the improvements reverts to me (as ground-lease landlord) when the ground lease ends. Can I include the capital improvement costs -- funded by the bond -- in my 'original purchase price' for gains-tax purposes when I eventually sell the completed building and land?
Yes. The Edgewater Company of Ulster proposed a structure where it would own vacant land in fee, ground-lease it to an industrial development agency (IDA), and serve as the IDA's construction agent fo…
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These are official tax letter rulings and advisory opinions issued by New York's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.