New York
A 1031 exchange of New York property, from contract to recording.
New York has no separate exchange rules, but its recording office is a checkpoint: a nonresident seller's estimated-tax form and the transfer-tax return travel with the deed, even when nothing is owed.
Selling investment property in New York as part of an exchange means two things for the closing file: the exchange agreement and contract assignment must be signed before the deed is delivered, and, if you are not a New York resident, Form IT-2663 must be filed with the deed showing the exchange, even though no estimated tax is due on the deferred gain.
onezero3one acts as qualified intermediary for exchanges of New York property, subject to a review of each file before an exchange agreement is signed. We coordinate with your closing attorney or title company; we do not give tax or legal advice.
What is specific to this state
The federal rules in IRC §1031 decide whether an exchange qualifies. The items below are state requirements that sit alongside them at closing or on the return. Each links to the official source it was checked against; confirm the current version with your closing agent and tax advisor before relying on it.
| Issue | What applies | Usually handled by | Source |
|---|---|---|---|
| Estimated tax at recording (nonresident sellers) | Nonresident individuals, estates and trusts file Form IT-2663 with the deed. For an IRC §1031 exchange with no gain recognized, the 2026 instructions say to mark box 4B, summarize the exchange, and still complete Part 3 and the IT-2663-V voucher with $0 due. The deed is not recorded without it. Nonresident sellers of New York real property; New York residents are outside Tax Law §663. | Seller signs; the closing attorney or title company submits it at recording | NY DTF, Instructions for Form IT-2663 (2026) Checked September 30, 2026 |
| Real estate transfer tax | New York State transfer tax is $2 per $500 of consideration, paid by the seller, reported on Form TP-584 at recording. An additional 1% applies to residential conveyances of $1 million or more and is paid by the buyer. The definition of conveyance includes exchanges; no exchange exemption was found. New York City adds its own tax and higher state rates at larger amounts (TP-584-NYC). Every deed; New York City property uses TP-584-NYC. | Closing attorney or title company | NY DTF, Instructions for Form TP-584 (8/25) Checked September 30, 2026 |
Nonresident sellers: IT-2663 still has to be filed
Nonresident individuals, estates and trusts selling New York real property estimate their New York income tax on the gain on Form IT-2663, and the county recording officer does not record the deed without it. For an exchange, the 2026 instructions give a specific route:
- Skip the estimated-tax computation when no gain is recognized under the Internal Revenue Code.
- Mark box 4B, summarize the transaction and state that it is an IRC §1031 like-kind exchange.
- Complete Part 3 and the IT-2663-V voucher even though the amount due is $0.
Cash or other property you take out of the exchange is taxable gain in the ordinary way, and a nonresident may still need to file a New York return for the year of the sale. New York residents do not file IT-2663.
Transfer tax applies to exchanges
New York State transfer tax is $2 for each $500 of consideration, paid by the seller and reported on Form TP-584 at recording. The statute's definition of a conveyance includes exchanges, and we found no exemption for them. Residential conveyances of $1 million or more also carry an additional 1% tax paid by the buyer, which matters when the replacement property is a New York residence held for investment, such as a rental condominium.
Property in New York City uses Form TP-584-NYC. The state rate rises at higher amounts for city property, and the city imposes its own real property transfer tax, administered by the NYC Department of Finance. We have not yet summarized the city tax here; ask your closing attorney for the figure on your deal.
Who does what at a New York closing
| Item | Who | When |
|---|---|---|
| Exchange agreement, contract assignment, notice to the buyer | You and the qualified intermediary | Before the deed is delivered |
| IT-2663 with box 4B and $0 voucher (nonresidents) | You sign; your closing attorney or title company submits it with the deed | At recording |
| TP-584 (or TP-584-NYC) and transfer tax | Closing attorney or title company | At recording, within 15 days of delivery of the deed |
| Instructions sending net proceeds to the intermediary | The intermediary, to the closing attorney or title company | Before funds are disbursed |
Buying elsewhere
We found no New York annual reporting requirement when the replacement property is outside the state. A nonresident is taxed by New York on gain from New York real property when that gain is recognized. The replacement state's rules apply to the purchase: many New York sellers look at Florida, New Jersey or Pennsylvania.
Questions New York sellers ask
I live in New Jersey and am selling a rental in New York. Do I pay New York estimated tax at closing?
Not on gain that is deferred in a qualifying exchange. You still file IT-2663 with box 4B and a $0 voucher so the deed can be recorded.
Who pays the transfer tax and the additional 1% tax?
The seller pays the state transfer tax; the buyer pays the additional 1% on residential conveyances of $1 million or more. If the seller does not pay or is exempt, the buyer becomes liable.
Is there a transfer-tax break for an exchange?
We found none at the state level. The city tax was not researched for this page.
What if the exchange fails after I filed IT-2663 with box 4B?
That is a question for your tax advisor: the gain would be reported on your New York return for the year of the sale. The IT-2663 instructions do not describe a separate follow-up filing.
Related
Sources
- NY Department of Taxation and Finance, Instructions for Form IT-2663 (2026) (checked September 30, 2026)
- NY DTF, Instructions for Form TP-584 (8/25) (checked September 30, 2026)
- NY DTF, Instructions for Form TP-584-NYC (8/25) (checked September 30, 2026)
- NY DTF, Instructions for Form IT-203 (nonresident return) (checked September 30, 2026)
Planning a New York sale?
Tell us where the property is (inside or outside New York City), whether you are a New York resident, and the expected closing date.
Discuss your New York exchange