New York · Selling NY Property as a Nonresident
Nonresidents selling New York real estate prepay the tax at the closing table.
New York does not wait until April to collect tax on a nonresident's real-estate gain — §663 makes the estimated tax a recording requirement for the deed.
What happens at closing when a nonresident sells New York real property?
Under Tax Law §663 the seller must compute estimated personal income tax on the GAIN (at the highest state rate) and pay it with Form IT-2663 — the county clerk will not record the deed without it. The payment is an estimate, credited against your actual liability when you file the IT-203 for the year.
Are there exemptions from the closing prepayment?
Yes — the main one: the property was your principal residence eligible for the federal §121 exclusion (certified on Form IT-2663 or IT-2664 as applicable). Certain transfers — no-gain transactions, foreclosures, transfers by exempt entities — also avoid the prepayment. The exemption removes the CLOSING payment, not necessarily all tax on a gain above the federal exclusion.
Is the gain itself always taxable by New York even though I live elsewhere?
Yes — gain from real property located in New York is New York-source income for nonresidents under §631, wherever you live. The same is true of gains from entities holding primarily New York real estate in some circumstances. The IT-2663 prepayment reconciles against this liability on your nonresident return.
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