The money side of downsizing in New York
Selling in New York carries two transfer taxes, buying a pricier next home can carry a third, and the property tax breaks for older owners do not follow you automatically. Here is how the main costs and programs work for the 2026 tax year.
What it costs to sell a home in New York
Who pays which cost is set by the contract and local custom, and much of it can be negotiated. These are the costs a seller in New York should expect to see.
| Cost | How it works |
|---|---|
| Real estate commissions | Not set by law and negotiable. Since August 17, 2024, offers of compensation to buyer's agents can no longer appear on the MLS, and buyers sign a written agreement with their own agent before touring homes. |
| New York State transfer tax | 0.4 percent of the price, or 0.65 percent on a New York City residential sale of $3 million or more. Paid by the seller. |
| NYC Real Property Transfer Tax | 1 percent of the price at $500,000 or less, 1.425 percent above $500,000, on the whole price. Covers houses, condo units and co-op shares. Customarily paid by the seller. |
| Co-op flip tax | A fee some co-ops charge on a sale, set by the building's own documents. It is not a government tax, and there is no standard rate. |
| Your attorney | The New York City Bar notes that attorneys are used in real estate transactions in most parts of New York. Downstate, the seller's attorney usually prepares the contract. |
| Building and closing fees | Co-op and condo sales can involve managing agent processing fees, move-out deposits and similar charges set by each building. Ask the managing agent for the list early. |
| Mortgage or share loan payoff | Any remaining balance and payoff fees come out of the proceeds. |
Title insurance is generally the buyer's cost in New York; the Department of Financial Services says the buyer is generally responsible for both the owner's and the lender's policies.
Sources: NAR settlement FAQs; Business Corporation Law section 501; New York State Bar Association.
New York State and NYC transfer taxes
The state tax is $2 for every $500 of the price, rounded up to the next $500. In New York City, a residential sale at $3,000,000 or more adds $1.25 per $500 on the entire price, so there is a cliff: a $2,999,999 sale pays 0.4 percent and a $3,000,000 sale pays 0.65 percent of all of it. The city's own transfer tax works the same way at $500,000, where the rate on the whole price moves from 1 percent to 1.425 percent.
On a $900,000 co-op in Manhattan, for example, the state tax is $3,600 and the city tax is $12,825, or $16,425 together. Our net proceeds calculator runs the same math for your price.
Outside the five boroughs, the state tax applies everywhere, and a few cities add their own. Yonkers charges the seller 1.5 percent (co-op sales are exempt) and Peekskill charges 1 percent. On the East End of Long Island, the Peconic Bay Region Community Preservation Fund tax of 2 percent is described as paid by the buyer, and some towns add a 0.5 percent housing fund tax. Ask your attorney or title company what applies at your address.
Sources: Tax Law section 1402; TP-584-NYC instructions; NYC Department of Finance; City of Yonkers; Peconic Land Trust; Town of Southampton.
Taxes when you buy the next home
If the next home costs $1,000,000 or more, the buyer pays the state's additional 1 percent tax, often called the mansion tax, on the whole price. In New York City, residential purchases of $2,000,000 or more also carry a supplemental tax that rises in steps, from 0.25 percent below $3 million to 2.9 percent at $25 million and above. Downsizing to a less expensive home often keeps a buyer under these thresholds, which is worth knowing when you set a budget.
If you plan to keep your current New York home rather than sell it, note the city's new annual surcharge on one to three family homes, condos and co-ops that are not the owner's primary residence, which took effect July 1, 2026. Primary residences are not subject to it. The Mayor's office and the Department of Finance explain who owes it.
Sources: Tax Law section 1402-a; Tax Law section 1402-b.
STAR school tax relief
STAR lowers school taxes on a primary residence, including condos and co-op apartments. In New York City it also applies in part to city taxes.
- Basic STAR is for owners with income of $500,000 or less for the credit.
- Enhanced STAR is for owners 65 or older. For 2026 to 2027 the income limit is $110,750, and it rises to $113,550 for 2027 to 2028. Starting in 2026, only one resident owner has to be 65 by December 31 of the benefit year.
- Credit or exemption. Owners who already have the STAR exemption keep it only on the same home. When you buy a new home, you register with the New York State Department of Taxation and Finance for the STAR credit, which arrives as a check or direct deposit. You must own and live in the home on July 1 for that year's credit.
How the benefit reaches a co-op shareholder can differ by building, so ask the managing agent and check the state's STAR portal after you close.
Sources: NYS DTF, types of STAR; STAR eligibility; 2026 STAR changes; STAR home page.
Senior exemptions in New York and on Long Island
NYC Senior Citizen Homeowners' Exemption (SCHE)
SCHE cuts the assessed value of a primary residence by 5 to 50 percent for owners 65 or older with combined income of $58,399 or less. Income of $50,000 or less gets the full 50 percent, and the reduction shrinks in steps up to the ceiling. One to three family homes, condos and co-ops qualify; co-op owners use a separate application. The deadline is March 15 (March 16 in 2026, because the 15th fell on a weekend), the benefit starts July 1 and it renews every two years. A similar Disabled Homeowners' Exemption uses the same income limits.
Sources: NYC311, SCHE; NYC Department of Finance, DHE.
NYC co-op and condo abatement
Co-op and condo units that are the owner's primary residence can receive a property tax abatement. Owners do not apply individually: the board applies for the whole building by February 15 each year and collects primary residence certifications from owners. You must own the unit by January 5 to get it for the tax year starting July 1. Details are on the Department of Finance abatement page.
The senior exemption outside the city
In Nassau, Suffolk and Westchester, the senior exemption under Real Property Tax Law section 467 is a local option. Each locality decides whether to offer it and sets its own income ceiling within state limits, so neighbors in different villages can see different rules. You apply to the local assessor with Form RP-467, usually by March 1, though dates vary. From 2026, localities may choose to grant up to 65 percent for seniors well under their income limit. Ask the assessor for the town where you plan to buy before you set a budget.
Sources: NYS DTF, senior citizens exemption; RPTL section 467; Governor's office, December 2025.
Income and estate tax
Under federal law you can generally exclude up to $250,000 of gain on the sale of your main home, or $500,000 on a joint return, if you owned it and lived in it for at least two of the five years before the sale. Gain above that is included in your New York income, and in New York City income tax if you are a city resident. Long-time owners can have gains above the exclusion, so keep records of improvements, which add to your basis.
If you move out of New York before the sale closes, a nonresident seller generally has to estimate and pay New York tax on the gain at closing using Form IT-2663 (IT-2664 for co-op shares), unless the home qualifies in full as a principal residence under the federal rule.
New York has its own estate tax. The basic exclusion amount is $7,350,000 for 2026, and an estate worth more than 105 percent of that loses the exclusion entirely. The federal exclusion is $15,000,000 for 2026. Downsizing changes what an estate holds, so it is a good moment to review plans with an estate attorney.
Sources: IRS Topic 701; IT-201 instructions; IT-2663 instructions (2026); NYS estate tax; Tax Law section 952; IRS estate tax.
General information, not advice. Tax rules, income limits and deadlines change every year, and bills now in Albany would change some of the figures above if passed. Confirm your situation with the Department of Finance, your assessor, the Department of Taxation and Finance and a qualified tax professional before making decisions.
Next steps
Put these numbers to work in the step-by-step Downsizing Guide and the guide to senior property tax exemptions, or get matched with a local downsizing specialist who can estimate your net proceeds and help you time the sale and purchase.