Nonresidents Now Required to Pay Estimated Personal Income Tax on
Gain From Sale
or Transfer of Real Property Located in N.Y.
ALBANY – Changes in New York’s tax law
now require nonresidents to pay an estimated personal income tax on any
gain from the sale or transfer of fee simple interests in real property
located in the state.
Effective for transfers after September 1, 2003,
nonresident individuals, estates and trusts, prior to recording of the
deed, must file an new IT-2663 form with the state Tax Department, pay
the estimated tax (if any) and obtain certification of compliance from
the department. Exceptions created in the new Section 663 of the
state’s personal income tax law include:
- real property used exclusively as a principal residence,
- mortgaged property that is in foreclosure or is to be transferred in
lieu of foreclosure, and
- property transferred to or by the federal government, the state of
New York, government mortgage agencies, or a private mortgage insurance
To qualify for an exemption, a revised form TP-584
(with a new Schedule D) must be completed by all sellers and presented
when the deed is recorded.
Fee simple interests refer to (real property) of
absolute inheritance, free of any condition, limitations, or
restrictions to any particular heirs.
According to Matthew J. Leeds of New York (Bryan Cave LLP), Chair of
the of state bar’s Real Property Law Section, the section’s
Title and Transfer Committee continues to review the changes and provide
comment to the Tax Department concerning the new law and regulations,
which were enacted at the end of the 2003 legislative session. Karl B.
Holtzschue of New York and Samuel O. Tilton of Rochester (Woods Oviatt
Gilman LLP) co-chair the committee.
Additional information and the new forms are available online, at http://www.tax.state.ny.us/pdf/memos/multitax/m03_2r_4i.pdf
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