Section 663 of the New York State Tax Law becomes effective September 1,
2003. Pursuant to the new law, non-resident taxpayers are required to pay
estimated personal income tax on the gain, if any, from the sale or transfer of
real property located inNew York.
The law shall not apply where the premises being sold or transferred is the
principal residence of the transferor; the transferor is a mortgagor in a
transfer in lieu of foreclosure or the transferor or transferee is the United
States of America, the State of New York, Fannie Mae, Freddie Mac, Ginnie Mae or
a private mortgage insurance company.
Most importantly from our perspective is that the law states that no
deed shall be recorded by any recording officer absent payment of
the estimated tax evidenced by a certification form the Commissioner of Taxation
and Finance or a certification by the transferor that the
law is inapplicable to the transfer.
Compliance with the new law enabling the recording of deeds on or after
September 1 is accomplished as follows.
Where exemption from the law is appropriate, Schedule D has been added to
Form TP-584. Part One of Schedule D is the certification of exemption by virtue
State residency of the
transferor. Part Two of Schedule D is the certification of exemption (by a
non-resident) by virtue of principal residence, transfer in lieu of foreclosure
or transfer to a government agency or private mortgage insurer.
Where there is no exemption, the procedure is, not surprisingly, somewhat
more complicated. In these circumstances, the non-resident taxpayer must
complete Form IT-2663 (Application for Certification for Recording of Deed and
Nonresident Estimated Income Tax Payment Voucher) and remit the estimated tax in
advance of the closing. Upon receipt of payment, the Department of Taxation and
Finance will return a certification to the transferor that the tax has been
paid. That certification must be attached to the deed in order for the deed to
be recorded. Needless to say, this requirement is rife with potential for delay
in the closing process where insufficient lead-time has been established for the
completion of the payment/certification process. Along those lines, it is
suggested that each title report issued by your office contain the following
NOTE: Effective September 1, 2003, Tax Law Section 663 requires that, under
certain circumstances, non- residents of New York State pay estimated personal
income tax liabilities resulting from the sale or transfer of New York real
property as a condition precedent to the recording of the deed. Failure to
comply with the requirements of the statute may result in delayed or adjourned
closings. Please contact this office if you require further information.
The Department of Taxation and Finance advises that neither the Schedule D of
Form TP-584 nor Form IT-2663 need be completed if the interest transferred is
not a fee simple interest in real property (i.e. leasehold interests, co-op
units) or if the real property is being transferred by anyone or any entity
other than an individual, estate or trust
Both Forms TP-584 and IT-2663 and their respective instructions may
be obtained at the Department of Taxation and Finance website at http://www.nystax.gov/
. Please note that the revised TP-584 must be used for
deeds submitted on or after September 1, 2003 but may be used