N.Y. Comp. Codes R. & Regs. tit. 20 § 575.13

Current through Register Vol. 46, No. 25, June 18, 2024

Section 575.13 - Credit for prior transfer tax paid

Tax Law, § 1405-A

(a) A grantor is allowed a credit against the tax due on a conveyance of real property to the extent that tax was paid by the grantor on a prior creation of a leasehold of all or a portion of the same real property or on the granting of an option or contract to purchase all or a portion of the same real property.

(b) The credit is computed by multiplying the tax paid on the creation of the leasehold or on the granting of an option or contract by a fraction, the numerator of which is the value of the consideration used to compute the tax paid which is not yet due to the grantor on the date of the subsequent conveyance (and which the grantor will not be entitled to receive after such date), and the denominator of which is the total value of the consideration used to compute the tax paid.

Example:

A, the owner of real property, leased the property to B for $400,000 consideration, which was to be paid to A over the term of the lease. Under the terms of the lease, B was provided an option to purchase the property. A paid a real estate transfer tax of $1600 based upon the $400,000 consideration. Several years later, before the expiration of the lease, B exercised the option and purchased the property from A. Up to the date of the sale, A had received $300,000 of the total $400,000 consideration. As a result of the sale, A was not entitled to receive the remaining $100,000 of consideration. A is entitled to a credit against the transfer tax due on the sale of the property computed as follows: $100,000 ÷ $400,000 × $1600 = $400 credit

N.Y. Comp. Codes R. & Regs. Tit. 20 § 575.13