New York City real property transfer tax applies both to transfers of real property located in New York City and to transfers of a controlling interest in an entity that owns real property in New York City. There is a presumption that multiple transfers of entity interests that are made within a three-year period are related, in which case they would be aggregated for purposes of determining whether there has been a transfer of a controlling interest. Taxpayers can rebut this presumption by proving that the transfers are unrelated, although the NYC Department of Finance has often challenged taxpayers attempting to do so. New York City taxpayers will welcome a recent decision by a New York City administrative law judge, which held that a taxpayer had successfully met its burden of proving that transfers made within a three-year period to a single transferee were unrelated.
Background
The NYC Administrative Code imposes a real property transfer tax (RPTT) that is generally at a rate of 2.625 percent of the consideration with respect to transfers of real property located in New York City for more than $500,000.
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