Understanding New York Property Transfer Laws

New York real estate is among the most valuable — and most legally complex — property you can own. Whether you're thinking about transferring property to your children during your lifetime, retitling it into a trust, protecting it from nursing home costs, or planning what happens to it when you die, you need to understand the rules. Get them wrong and you trigger unexpected transfer taxes, lose Medicaid eligibility, or hand your heirs a capital gains tax bill that could have been avoided entirely.

This guide covers the key elements of New York property transfer law: the deed types you need to know, the transfer taxes that apply when property changes hands, the Medicaid implications of lifetime transfers, and how estate planning tools — trusts, LLCs, and careful deed structuring — can protect your property and your family.

Deed Types in New York

A deed is the legal instrument that transfers real property ownership. New York recognizes several types of deeds, each with different warranties and appropriate uses:

Bargain and Sale Deed (With or Without Covenant Against Grantor's Acts)

This is the most common deed in New York real estate transactions. Without covenants, it conveys title without any warranty — the grantor makes no promise that the title is clear. With a covenant against grantor's acts, the grantor promises that they haven't done anything to encumber the title during their ownership, but makes no warranty about what happened before. Most standard sales use a bargain and sale deed with covenant against grantor's acts.

Full Covenant and Warranty Deed

This deed provides the buyer with the strongest protections — the grantor warrants against all title defects, whether they arose before or during the grantor's ownership. The seller is essentially guaranteeing a clean title. These are less common in New York than in other states, partly because title insurance provides similar protection.

Quitclaim Deed

A quitclaim deed transfers whatever interest the grantor has — no warranties, no promises. It's most commonly used for transfers between family members, adding or removing a spouse from title, correcting prior deeds, or transferring property into or out of a trust. It's the appropriate deed when the relationship between parties eliminates the need for warranties. It's the wrong deed when a buyer is paying market value and expects a clean title.

Executor's Deed

Used when an estate sells real property to a third party. Signed by the executor or administrator acting in their fiduciary capacity. Provides limited warranties that the executor is authorized to convey the property.

Trustee's Deed

Used when a trustee conveys property held in trust. Identifies the trust and the trustee's authority. Standard for transferring property out of a trust — whether to a beneficiary at distribution or to a buyer in a sale.

New York Real Property Transfer Taxes

Property transfers in New York trigger several potential taxes, depending on location and value:

New York State Real Property Transfer Tax

Under New York Tax Law § 1402, the state imposes a real property transfer tax (RPTT) of $2 per $500 (0.4%) of the consideration paid for residential real property sales. The tax is paid by the seller at closing. A few key points:

• For residential property sold for $3 million or more, an additional "mansion tax" applies at the state level
• For commercial property, different rates apply
• Transfers to revocable trusts where the grantor is also the trustee are typically exempt — no tax is triggered because the beneficial ownership hasn't changed
• Transfers to irrevocable trusts are taxable if there's consideration, but most estate planning transfers to Medicaid trusts are structured as gifts ($0 consideration) — no transfer tax but Medicaid look-back implications apply

New York City Real Property Transfer Tax

If the property is in New York City (Manhattan, Brooklyn, Queens, the Bronx, or Staten Island), the NYC RPTT also applies:

• 1-2 family homes and condos under $500,000: 1% of consideration
• 1-2 family homes and condos $500,000 and over: 1.425%
• Other transfers (co-ops, commercial, multi-family): 1.425% under $500,000; 2.625% at or above $500,000

NYC Mansion Tax

The NYC mansion tax applies to residential property purchases at or above $1 million and is paid by the buyer, not the seller. Rates range from 1% at $1 million to 3.9% at $25 million and above. For estate planning purposes, this tax affects buyers — if you're selling property from an estate, your buyer may face a significant mansion tax obligation that affects negotiation.

Gifting Property During Your Lifetime: Tax and Medicaid Implications

Many property owners think about transferring their home to their children during their lifetime to "avoid probate" or "protect it from nursing home costs." These are legitimate goals — but the execution matters enormously.

Gift Tax

New York does not have a gift tax. Transfers of real property as gifts during your lifetime don't trigger New York gift tax. At the federal level, gifts above the annual exclusion ($18,000 per recipient in 2026) reduce your federal lifetime exemption ($13.99 million in 2026). Most property transfers to children don't trigger federal gift tax unless your estate is very large — but they do require filing a federal gift tax return (Form 709) if the value exceeds the annual exclusion.

The Capital Gains Problem with Lifetime Gifts

Here's the critical issue most people miss. When you give property to a child during your lifetime, they inherit your original cost basis — not a stepped-up basis. If you bought your Brooklyn brownstone in 1982 for $80,000 and it's now worth $2 million, and you gift it to your child today, their basis is $80,000. When they sell it, they'll owe capital gains tax on approximately $1.92 million of gain. At federal long-term capital gains rates (potentially 20% plus the 3.8% Net Investment Income Tax) and New York state income tax, that's a significant bill.

If instead you hold the property until death and leave it to your child through your estate, they receive a stepped-up basis equal to the date-of-death fair market value. If the property is worth $2 million at your death, their basis is $2 million. If they sell it shortly after, they owe no capital gains tax. The potential tax savings from holding property until death rather than gifting it outright can be in the hundreds of thousands of dollars. This is one of the strongest arguments for planning through a trust rather than a direct gift.

Medicaid Look-Back on Property Transfers

New York's Medicaid program has a 5-year look-back period. Any transfer of real property for less than fair market value within 5 years of applying for Medicaid long-term care benefits creates a penalty period during which Medicaid won't pay for nursing home care. For a property worth $800,000 transferred to a child, the penalty period could be several years — during which the family has to pay nursing home costs privately despite having no available assets.

This is why Medicaid asset protection planning must be done well in advance — ideally 5 or more years before you anticipate needing care. Our Medicaid planning guide covers the look-back period and how to plan around it.

Transferring Property to a Revocable Trust

Deeding your property into a revocable living trust avoids probate without triggering transfer taxes (when structured correctly), preserves the stepped-up basis at death, and doesn't affect Medicaid eligibility (because a revocable trust is treated as your own property for Medicaid purposes). For most homeowners whose primary estate planning goal is avoiding probate and ensuring seamless transfer at death, a revocable trust is the right tool.

To transfer real property into a trust, you record a deed from yourself to yourself as trustee ("John Smith to John Smith, Trustee of the John Smith Revocable Trust"). In New York City, this deed is subject to transfer tax analysis — most transfers to revocable trusts where the grantor-trustee is the same person are exempt, but the filing must be correct. A real property attorney should handle the deed.

Irrevocable Medicaid Asset Protection Trusts

An irrevocable Medicaid Asset Protection Trust (MAPT) transfers property out of your name at least five years before you apply for Medicaid. After five years, the property is not counted for Medicaid eligibility. You can retain the right to live in the property and to receive income generated by it. You cannot sell the property and pocket the proceeds — those belong to the trust.

The MAPT provides Medicaid protection but sacrifices the stepped-up basis only partially. The trust is irrevocable, so the property doesn't receive a full step-up at your death as it would through a revocable trust or a will bequest. Tax planning and Medicaid planning can work in opposite directions here. An experienced attorney can structure the MAPT to minimize this conflict — for example, by retaining a limited power of appointment that may preserve basis step-up opportunities.

Property Transfers Through LLCs

Holding investment real property in a limited liability company (LLC) provides liability protection — the LLC separates the property's liabilities from your personal assets. For estate planning purposes, LLC interests can also be transferred more efficiently than real property itself in certain situations. However, for a primary residence, LLC ownership is rarely appropriate — it can affect mortgage financing, homestead exemptions, and co-op board approval. For rental properties and investment real estate, the analysis is more favorable.

Transferring LLC membership interests rather than deeds can sometimes reduce transfer tax exposure. It can also enable discounted valuations for gift and estate tax purposes — a minority membership interest in a closely held LLC may be valued at a discount to the underlying asset value for gift tax purposes, allowing more value to be transferred within the annual exclusion. This is sophisticated planning that requires careful coordination between real estate, tax, and estate planning attorneys.

Our detailed guide to estate planning for real estate owners in New York covers LLCs, trusts, and multi-property strategies in depth.

Inheriting New York Real Property: What to Know

When you inherit real property through an estate or trust, several rules apply:

• No transfer tax: Transfers from an estate or trust to a beneficiary at death don't trigger transfer taxes
• Stepped-up basis: Your cost basis is the fair market value on the date of the original owner's death — generally a significant tax advantage
• Property tax reassessment: In New York, inheriting property generally doesn't trigger a reassessment for STAR exemption purposes. However, STAR exemptions don't automatically transfer — the new owner must apply
• Co-op rules: Cooperative apartments have their own transfer rules set by the board — an inherited co-op may require board approval for transfer to heirs, even in an estate context

For beneficiaries wondering what to do with inherited real property, our guide on handling an inheritance in New York covers the key considerations including the stepped-up basis and capital gains implications of selling.