Taxes on Selling a House in New York

Capital gains tax

You’ve likely heard the term “capital gains tax,” but what is it?

When you sell your home for more than its adjusted cost basis, the profit is known as a capital gain. To calculate it, combine your original purchase price with the cost of eligible capital improvements, then subtract that total and any qualifying selling expenses from the sale price. The amount left over is your capital gain, but whether you owe taxes on it depends on your individual circumstances.

For example, you purchased your New York home for $350,000, spent $50,000 on eligible capital improvements like a kitchen and bathroom renovation, and eventually sold it for $550,000 with $30,000 in eligible selling expenses. Your taxable gain would be $120,000 before applying any home sale exclusion or other tax adjustments.

State capital gains tax

Capital gains tax rules differ from state to state. Florida, for example, has no individual income tax, so it doesn’t impose a state capital gains tax on individuals.

New York, however, generally taxes capital gains as ordinary income using its regular state income tax rates, which range from 4% to 10.9%, depending on your taxable income and filing status. In other words, profits from selling your home may be taxed at the same state income tax rates that apply to your other taxable income.

If you’re a New York City resident, you may also owe NYC personal income tax on taxable gains, with rates ranging from 3.078% to 3.876%, depending on your income and filing status. However, eligible home-sale exclusions may reduce the amount subject to tax.

Federal capital gains tax

Capital gains are also classified as “short-term” or “long-term” at the Federal level.

Your federal capital gains tax rate depends on how much of your home sale profit is taxable. Knowing your tax bracket can help you estimate your potential tax bill and plan for your proceeds. Just remember that the rate is based on your overall taxable income, not solely on the profit you make from selling your home.

2026 short-term capital gains tax brackets

2026 long-term capital gains tax brackets

It’s possible to have your capital gains excluded at the Federal level, assuming you qualify. The maximum amount of capital gain that can be excluded is $250,000 for single filers, and $500,000 for a married couple that is filing jointly.

According to the IRS Publication 523, you must meet these criteria:

You may still qualify for a partial exclusion if you don’t fit any of the above criteria. This may apply if you need to sell your home because of a change in your job, health issues, or certain unforeseen circumstances.

How to report your New York capital gains taxes

• For your federal return, report your capital gains and losses by using the U.S. Individual Income Tax Return (IRS Form 1040) and Capital Gains and Losses, Schedule D (Form 1040).
• For your New York capital gains, use the Resident Income Tax Return, Form IT-201.

Transfer tax

When you sell your home and officially transfer ownership to the buyer, you’ll usually have to pay a transfer tax, also known as documentary stamp tax or recordation tax. Like other taxes, it’s one of the ways state or local governments raise revenue. Since it’s part of your closing costs, it can also affect how much money you actually take home from the sale.

New York charges a real estate transfer tax when ownership of a property is transferred for more than $500 in consideration. The state tax is generally $2 for every $500 of the sale price, or portion thereof, and an additional 1% mansion tax applies to residential properties sold for $1 million or more. So, if your home sells for $550,000, you’d pay about $2,200 in transfer taxes.

In New York City, the real property transfer tax rate for one- to three-family homes, individual condos, and individual co-op apartments is 1% of the sale price for properties sold for $500,000 or less, and 1.425% for properties sold for more than $500,000.

For residential properties sold for $2 million or more, a supplemental state transfer tax applies, with rates ranging from 0.25% to 2.9%, depending on the sale price. In addition, an additional base tax of $1.25 for every $500 of the sale price, or fraction thereof, applies to residential properties sold for $3 million or more.

The seller generally pays the state’s base transfer tax, unless a contract between the buyer and seller says otherwise. If the seller doesn’t pay the tax or is exempt, the responsibility can fall to the buyer.

Meanwhile, the buyer is typically responsible for the mansion tax and applicable supplemental taxes. Since rates and responsibilities can vary based on the property’s location and sale price, check with your real estate agent for details.

Property tax

Property tax is a yearly tax that homeowners pay based on their property’s assessed value. The amount you owe depends on where your home is located, since property tax rates vary by state and even by local area. According to the Tax Foundation, New York’s effective property tax rate on owner-occupied housing value is typically 1.30%.

Property taxes in New York are typically billed annually, semiannually, or quarterly, depending on where the property is located. In New York City, properties with an assessed value of $250,000 or less are billed quarterly, with payments due in July, October, January, and April. Properties assessed at more than $250,000 are generally billed semiannually, with payments due in January and July.

Outside NYC, billing schedules vary by municipality and may include separate school and county or town tax bills. Check with your local tax office to confirm your property tax bills and payment deadlines.

When you sell your home, property taxes are often prorated between you and the buyer at closing. This means you’ll generally pay your share of the property taxes for the time you owned the home, while the buyer covers their share for the time after the sale. How the taxes are divided depends on local practices and the terms of your sale.

The New York Department of Taxation and Finance can provide more information about taxes specific to your city or town here.

Inheritance tax

In some states, if you inherit a home, you may owe taxes. New York, however, is not one of these states. However, you will be responsible for any property taxes owed on the home. It’s also possible that a lien might exist on the property if the previous owner was not up to date on their taxes, which you would be responsible for.

Selling an inherited home can come with a tax advantage called a “stepped-up basis.” Instead of using the amount the previous owner originally paid, the IRS generally bases your cost basis on the home’s fair market value when they passed away. This means you’ll generally pay capital gains tax only if you sell the home for more than its fair market value when you inherited it, and only on the difference after eligible adjustments.

»Learn more: Want to know exactly how much you’ll walk away with from your home sale? Use our New York Closing Cost Calculator to get a personalized estimate of your selling expenses and see your potential proceeds after closing.

Other selling expenses you might encounter in New York

Title fees: Title fees typically include a title search and title insurance. Title insurance helps protect both the buyer and lender from potential problems with a home’s title. These issues could include things like forged documents, a previously unknown will, or restrictions on the deed that weren’t discovered during the title search.

In New York, buyers typically pay for the owner’s title insurance policy, lender’s title insurance (if they take out a mortgage), and most related title expenses, such as title searches and recording fees. However, local customs vary, especially when it comes to title search costs, and buyers and sellers can negotiate a different arrangement.

Settlement fees: Also called escrow fees, settlement fees are usually 1% of the home sale value. This lump sum is charged by the title company, escrow company, or attorney handling the closing process. These fees typically cover the costs of preparing final documents, completing the transaction, and distributing payments to the appropriate parties. The exact amount and who pays these fees can vary depending on the agreement between the buyer and seller.

Agent commissions: Historically, sellers paid a total commission of around 5% to 6% of the home’s sale price, which was usually split between the listing agent and the buyer’s agent. But after the National Association of Realtors settlement changed how agent fees are handled, buyers now work directly with their agents to negotiate their own commission costs. For sellers, this typically means paying only their listing agent’s commission, which is often around 2.5% to 3% of the sale price, depending on the agreement.

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How to prepare for New York real estate taxes

Real estate taxes don’t need to be intimidating, and they don’t need to catch you off guard. There are several ways you can get an idea of what you’ll owe before the time comes to sell your home, and HomeLight is here to help. Here are some final steps to consider:

• Know your home’s value: Use an online automated valuation model (AVM) tool like HomeLight’s free Home Value Estimator. Having a ballpark idea of what your home might be worth can help you calculate the potential capital gains from the home sale.
• Save the right documents: Know what tax documents you’ll need to sell before doing so. Consult with your tax professional about the federal and state documents needed in New York and the tax breaks you might qualify for.
• Find a top agent: An experienced real estate agent can guide you through the home sale process. They can help you understand your tax burden and maximize your profits. Our data shows that the top 5% of real estate agents across the U.S. sell homes for 10% more than the average real estate agent.

HomeLight makes it easy to find top real estate agents in your market. From our Agent Match tool to innovative programs like Simple Sale and Buy Before You Sell, we have you covered when it comes to selling your home, ensuring every transaction is simple, certain, and satisfying.

Editor’s note: This post is for educational purposes only, not financial, tax, or legal advice. HomeLight recommends consulting an advisor for guidance tailored to your situation.

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