New York Property Tax Guide — Buying, Holding, Selling

Your tax bill is roughly a multiplication: assessed value × tax rate − exemptions. The rate is set annually by your taxing jurisdiction and exemptions are things you apply for, but the lever you can actually push on is the assessed value.

Assessed value is not market value. Assessors estimate market value (the price your home would fetch on the open market), then apply a fixed ratio to get the taxable assessed value. In New York City, for a one-to-three-family home (Class 1), the assessed value is set at 6% of market value; for larger buildings of more than ten units (Class 2), the headline ratio is 45%. So a Class 1 home the city pegs at $1,000,000 of market value carries roughly a $60,000 assessed value, and the rate applies to that.

NYC sorts every property into one of four classes:

1. Class 1 — most 1–3 family homes;
2. Class 2 — co-ops, condos, and rental buildings;
3. Class 3 — utility property;
4. Class 4 — commercial and industrial.

Each class has its own rate, set annually. The NYC Department of Finance (DOF) lists fiscal-year 2026 rates at Class 1: 19.843%, Class 2: 12.439%, Class 3: 11.108%, and Class 4: 10.848%. But note that these rates apply to the assessed value, not market value — which is why the effective burden on a Class 1 home is far lower than 19.8% of its sale price.

Every January, DOF mails a Notice of Property Value (NOPV) showing the city's estimate of your market value, your assessed value, your tax class, and any exemptions. Read it the day it arrives: if the market value sits well above what comparable nearby homes have actually sold for, that is your opening to grieve (see the Holding section).

How Long Island differs. NYC's four-class system applies only inside the five boroughs. Long Island's Nassau and Suffolk counties each run county- and town-by-town, with assessment cycles, ratios, and grievance deadlines that look nothing like the city's — spelled out in the grievance part of the Holding section below. When you buy on Long Island, don't map NYC's calendar or classes straight onto it.

A typical NYC home sale triggers three separate transfer-type taxes — two paid by the seller, one famously by the buyer. Full detail in NYC Mansion Tax & Transfer Taxes, Explained.

What the buyer carries: the mansion tax. This is the one buyers must internalize, and it scales sharply with price. There is no single mansion-tax rate — it is two layers that stack: the first is a statewide additional tax of 1% of the price on residential property sold for $1 million or more, paid by the buyer; the second is a progressive supplemental tax that stacks inside NYC for residential sales of $2 million or more. The effective buyer-paid mansion tax in the five boroughs runs as follows:

Purchase price	Mansion tax (buyer)
$1,000,000 – under $2,000,000	1.00%
$2,000,000 – under $3,000,000	1.25%
$3,000,000 – under $5,000,000	1.50%
$5,000,000 – under $10,000,000	2.25%
$10,000,000 – under $15,000,000	3.25%
$15,000,000 – under $20,000,000	3.50%
$20,000,000 – under $25,000,000	3.75%
$25,000,000 and above	3.90%

Two features matter. First, the rate applies to the full purchase price, not just the slice above each threshold — the brackets are all-or-nothing. Second, that creates a cliff at every line: buying at $2,000,001 instead of $1,999,999 lifts the rate from 1.00% to 1.25% on the entire price, a jump of roughly $5,000 for one extra dollar. This is exactly why experienced buyers and their attorneys watch the round-number thresholds so carefully.

The two transfer taxes the seller carries (paid by the seller at purchase, but worth knowing as a buyer):

• New York State transfer tax: $2 for each $500 of price — effectively 0.4%;
• NYC Real Property Transfer Tax (RPTT): residential rate is 1.0% at $500,000 or less, and 1.425% above $500,000. Note the "cliff" at $500,000 too — the higher rate applies to the entire price.

A worked example (a $1,500,000 Manhattan condo): the buyer pays mansion tax of $1,500,000 × 1.0% = $15,000 (no NYC supplemental applies below $2M); the seller pays NYS transfer tax of $6,000 plus NYC RPTT of $21,375.

Two practical notes: mansion and transfer taxes are generally paid at closing and are not financeable into a typical mortgage, so budget them as cash; and new construction is different — many new-development contracts ask the buyer to pay the seller's transfer taxes too, a negotiable contract term your attorney should flag when you tour new developments. For the full purchase process, read The Complete NYC Buying Guide.

After you buy, three things can genuinely lower your annual bill: new-development abatements, the STAR break, and the grievance you can file every year.

1. New-development abatements: 421-a and 485-x. When a new condo's carrying costs look almost too low, that is often a tax abatement — and it has a name and an expiration date. Full detail in NYC New-Development Tax Abatements (421-a and 485-x).

• 421-a (since 1971) exempts the new value a developer builds from property tax. Its last major version, branded "Affordable New York" in 2017, typically ran 35 years: full (100%) exemption for the first 25 years, then a phase-out over the final 10. It stopped accepting new projects after June 15, 2022, but projects that broke ground before the cutoff were given until June 15, 2031 to finish and still qualify — so you'll see "421-a" on listings for years.
• 485-x (April 2024, Real Property Tax Law §485-x, branded "Affordable Neighborhoods for New Yorkers / ANNY," administered by HPD) is the successor, applying to projects that commence construction between June 16, 2022 and June 15, 2034, with completion by June 15, 2038. For homeownership (condo/co-op) projects the relevant track requires 6+ units located outside Manhattan, with every unit averaging an assessed value of no more than $89 per square foot, a 5-year owner-occupancy requirement, and a 20-year exemption.

The key idea: an abatement is a clock, not a permanent feature. It phases out over the back end of the term, and once it fully expires the unit is taxed on its full assessed value — which can add several hundred to a couple thousand dollars a month to carrying costs. Before signing, ask which program, which version, how many years are left, and what the year-by-year phase-out looks like. (For the record: 421-a/485-x are technically exemptions that reduce taxable value; NYC also has true abatements — such as the co-op/condo property tax abatement and J-51 — that reduce the tax owed directly.)

2. STAR school-tax relief. This separate, statewide break on your school taxes is the one homeowners most often forget to claim. There are two tiers:

• Basic STAR (owner-occupied primary residence): the STAR credit income limit is $500,000 or less; the older exemption form is $250,000 or less;
• Enhanced STAR (an owner 65 or older — only one owner needs to qualify): the income limit is $110,750 or less for 2026 benefits, rising to $113,550 for 2027, measured from your 2024 tax return.

Important shift: the STAR exemption (a reduction on the bill itself) is no longer available to new homeowners — new owners register for the STAR credit (a check or direct deposit from New York State) instead. If you just bought, register with the NYS Department of Taxation and Finance; it is one of the easiest annual savings to claim.

3. The assessment grievance. If the market value on your NOPV is too high, your assessed value is too high and you're overpaying — and that number can be challenged every single year, on a clock. Full detail in Property Taxes and How to Grieve Them.

• New York City: appeal to the independent NYC Tax Commission — not the Department of Finance. Class 1 (1–3 family homes) deadline is March 15 on Form TC108; Classes 2/3/4 file by March 1. When the date falls on a weekend it rolls to the next business day (in 2026, Class 1 was March 16). The deadlines are firm and cannot be extended.
• Nassau County: file with the Assessment Review Commission (ARC), mostly online through AROW. For the 2027–2028 tax year the window ran January 2, 2026 through March 31, 2026. By law, ARC can only keep your assessment the same or lower it — filing cannot raise it — which is why many Nassau owners grieve every year as routine.
• Suffolk County: file with the Assessor's office in your town (there are ten). The deadline is the third Tuesday in May (May 19 in 2026), with a filing period that opens just weeks earlier.

The strongest case is built on comparable sales: recent arm's-length transactions of similar nearby homes that came in below the city's estimate. Grieving your assessment and claiming STAR are two separate actions — do both.

Your sale price is not your payday. At sale, commission, transfer taxes, attorney fees, and a co-op flip tax carve out a large slice first (see A Seller's Taxes and Net Proceeds in New York), but the two tax items that genuinely need planning are capital-gains tax and, for foreign sellers, FIRPTA withholding.

Capital-gains tax — and the exclusion that often erases it. Capital-gains tax is owed on your profit, not your sale price, and for many primary-home sellers it is zero. Your taxable gain is roughly the sale price, minus selling costs, minus your adjusted basis (what you paid plus qualifying capital improvements).

The Section 121 exclusion is the key rule: under IRS Publication 523, if the home was your main home and you meet both an ownership test and a use test — you owned and lived in it as your primary residence for at least 2 of the last 5 years — you can exclude up to $250,000 of gain if single, or $500,000 if married filing jointly. You generally cannot use it if you claimed it on another home sale within the 2 years before this one.

Where the gain exceeds the exclusion (or the home doesn't qualify — say an investment property), the remainder is taxed:

• Federal long-term capital gains (held more than a year): 0%, 15%, or 20% depending on taxable income, plus a possible 3.8% Net Investment Income Tax (NIIT) for higher earners;
• New York State does not give capital gains a preferential rate — it taxes the gain as ordinary income, on a scale currently reaching 10.9%; NYC residents owe an additional city income tax on top.

FIRPTA — the rule foreign sellers must plan for. If the seller is a foreign person for US tax purposes (a non-resident, not a green-card holder or someone meeting the substantial-presence test), FIRPTA requires the buyer — not the seller — to withhold a portion of the sale price and remit it to the IRS as a prepayment against the seller's potential US tax, reported on Form 8288 and Form 8288-A.

The standard withholding rate is 15% of the amount realized (essentially the gross price, not your profit). Where the buyer will use it as a residence, reduced rates apply:

Situation	FIRPTA withholding
Buyer will use it as a residence, price $300,000 or less	None
Buyer will use it as a residence, price $300,001–$1,000,000	Reduced to 10%
Most other dispositions by a foreign seller	15%

Crucially, FIRPTA is withholding, not a final tax — a foreign seller files a US return to reconcile and may be refunded any excess; and when 15% of the price clearly exceeds the actual tax owed (a thin-margin or loss sale), you can apply to the IRS for a withholding certificate before closing to reduce it. These processes take time, so line up a cross-border tax advisor early.

Sell a rental that has doubled and the tax bill stings: federal capital-gains tax, depreciation recapture, plus New York State and (in the city) NYC income tax. Section 1031 of the Internal Revenue Code offers a path: roll the proceeds from one investment property into another and defer the tax — defer, not erase. 1031 is unforgiving about process: miss a deadline by a day, touch the cash at the wrong moment, or pick the wrong kind of property, and the whole thing collapses into a taxable sale. Full detail in The 1031 Exchange, Plainly Explained.

What qualifies and what doesn't:

• Since the Tax Cuts and Jobs Act of 2017, Section 1031 applies only to real property (from 2018, personal/intangible property like equipment, vehicles, and artwork no longer qualifies);
• Your home doesn't qualify — it's personal-use property and can't be the relinquished or replacement property (selling a main home has the separate Section 121 exclusion);
• Property you flip doesn't qualify either;
• "Like-kind" is broad — the IRS treats most U.S. real estate as like-kind to other U.S. real estate — but one hard line: U.S. real property is not like-kind to real property outside the United States.

The qualified intermediary (QI): you can't touch the money. If you have actual or constructive receipt of the proceeds — even for a moment, even in your own escrow — the IRS treats it as a sale and the deferral is gone. The fix is an independent third-party qualified intermediary (not your agent, attorney, or accountant): you sign an exchange agreement before the sale closes, and the QI holds the proceeds and acquires the replacement property for you.

The two clocks: 45 days and 180 days. Both start on the same day (the date you transfer the relinquished property) and run concurrently:

Deadline	What you must do	When
45-day identification	Identify replacement property in writing, signed and delivered to the QI	No later than 45 days after the transfer
180-day exchange	Actually close on the replacement property	The earlier of 180 days after the transfer, or your tax-return due date (including extensions)

Two things people miss: the 45 days are inside the 180 (identify on day 44 and you still have until day 180 to close); and the 180-day window ends on the earlier of 180 days or your return's due date, so a late-year sale can shorten the back end unless you file for an extension. There are no extensions for hardship, and the deadlines fall on calendar days (weekends and holidays included).

Identifying replacement property: the rules of three. Within 45 days the identification must be specific and in writing (an address or distinguishable name, not "a building in Queens") and fit one of: the three-property rule (up to three properties of any value — most exchanges use this), the 200% rule (any number, as long as combined fair market value doesn't exceed 200% of what you sold), or the 95% rule (more than that, but only if you acquire at least 95% by value of everything identified — rare and risky).

"Boot": the part that stays taxable. 1031 defers tax only on the value you roll forward; anything you pull out is boot, taxable that year: cash boot (leftover proceeds you don't reinvest) and mortgage boot (a drop in debt — a smaller new mortgage counts as boot even with no cash changing hands). To defer the entire gain: buy replacement property of equal or greater value, reinvest all the net proceeds, and carry equal or greater debt.

You report the exchange on Form 8824. One more trap: with a related party, generally if either side disposes of the property within two years, the deferred gain comes back into income. This is deferral, not deduction — the tax waits in the basis of the next property until you sell without exchanging again. To weigh timing on a New York investment property, contact our team.

Non-citizens and non-residents can absolutely buy in New York — the U.S. places almost no restrictions on who may own residential real estate. The real work is in the structure, and tax is at its core. Full detail in Buying NYC Real Estate as a Foreign or Non-Resident Buyer.

1. ITIN: your tax ID when you have no SSN. To file U.S. tax paperwork (especially when you sell or rent out), non-residents who aren't eligible for a Social Security number use an ITIN (Individual Taxpayer Identification Number), applied for on Form W-7, usually attached to a U.S. tax return. A valid passport generally proves both identity and foreign status in one document; the IRS requires original documents or copies certified by the issuing agency — it does not accept notarized copies — and charges no fee for the application. Plan for the timeline: the IRS asks you to allow about 7 weeks, stretching to 9–11 weeks during tax season (mid-January to the end of April) or if you apply from abroad. Start early so a missing ITIN doesn't hold up a closing.

2. The 15% FIRPTA withholding at sale. This is the rule that surprises foreign owners most, because it bites on the way out. When you sell, the buyer must withhold 15% of the amount realized (with residence exceptions — none at $300,000 or less, 10% from $300,001–$1,000,000) as a prepayment against your U.S. tax, reconciled and refundable on your return, and reducible via a withholding certificate — see the Taxes at Sale section above.

3. Estate tax: the $60,000 trap. This is the single most important thing for a non-resident, non-citizen owner to understand. U.S. real estate is treated as U.S.-situated property, so it falls inside the U.S. estate tax net when the owner dies. And the exemption for a non-resident, non-citizen is not the multi-million-dollar amount U.S. citizens enjoy — it is just $60,000, a figure that has stood for decades and is not indexed for inflation. Above that threshold, the estate must file Form 706-NA, and the rate climbs to as high as 40%. In plain terms: a foreign buyer owning a $1.5 million NYC condo in their personal name could face a seven-figure liability on death unless planning is in place. Relief may come from a U.S. estate-and-gift-tax treaty (the U.S. has them with roughly 15 countries) or from a holding structure built for this problem. This is exactly why the ownership-structure choice (own name vs. LLC) should be made before you sign a contract, with a cross-border tax advisor — restructuring later can trigger tax.

4. Financing: foreign-national loans. You don't have to pay cash. A category of lender offers foreign-national mortgages that don't require an SSN, U.S. credit, or U.S. income, looking instead at international credit, overseas bank references, and verified foreign income and assets. The trade-off is a larger down payment — 2026 programs commonly require roughly 25% to 40% down, with higher rates.

5. Don't forget the ordinary buyer costs. Foreign or not, every buyer faces the mansion tax (starting at 1% on purchases of $1,000,000 or more and rising in tiers — see Taxes at Purchase), standard closing costs, and ongoing property taxes and common charges.

Separately, bringing overseas funds into the U.S. raises remittance and source-of-funds compliance questions — an anti-money-laundering and banking matter covered in Bringing Overseas Funds to Buy U.S. Property, Compliantly.

Bottom line: arrange foreign-national financing early, get your ITIN in the pipeline, understand that FIRPTA withholds 15% when you sell, and get cross-border tax advice on ownership structure and estate-tax exposure before you sign. Do those and the rest is ordinary house-hunting. To connect with the right attorney, CPA, and lender for a cross-border purchase, contact our team.