What Are the Tax Implications of Selling a Home on Long Island?

What are the tax implications of selling a home on Long Island?
When you sell your Long Island home, it’s important to understand potential tax consequences. Between capital gains, transfer taxes, and possible exemptions, knowing what applies to your situation helps you plan ahead. Eric Berman REALTOR explains the basics of what sellers should expect—but always consult a qualified tax professional for personalized advice.

1. Capital Gains Tax

If your home has increased in value since you bought it, you may owe capital gains tax on the profit.

Primary Residence Exemption

• If you’ve lived in your home for at least two of the last five years, you may qualify for an exclusion:

  • Up to $250,000 in profit if single

  • Up to $500,000 in profit if married filing jointly

• This applies only to your primary residence, not investment or vacation properties.

Example

If you bought your home for $500,000 and sell it for $900,000, your gain is $400,000. If you’re married and qualify for the exemption, you won’t owe capital gains tax on that amount.

2. State and Local Taxes

New York State Transfer Tax

• Sellers pay a 0.4% transfer tax ($4 per $1,000 of the sale price).

• Example: A $700,000 home = $2,800 in transfer tax.

Mansion Tax

• Applies to properties sold for $1 million or more.

• Usually paid by the buyer, but negotiations may shift this cost.

Long Island County Variations

• Nassau and Suffolk counties have additional fees for recording and title processing.

• Some towns charge small administrative or community development fees.

3. Property Tax Adjustments

At closing, sellers typically pay property taxes up to the day of transfer. If you prepaid taxes beyond that date, you’ll receive a prorated credit from the buyer.

4. Potential Deductions

You may be able to deduct:

• Real estate agent commissions

• Attorney fees

• Staging and marketing expenses

• Certain home improvements that increased value

These deductions can reduce your taxable gain.

5. Special Considerations for Investment or Rental Properties

If your Long Island property was a rental or investment, you may owe more in capital gains and depreciation recapture taxes. A 1031 Exchange may allow you to defer taxes if you reinvest proceeds into another property.

6. Keeping Records

Maintain documentation of:

• Purchase price and closing statement

• Receipts for major improvements

• Closing costs and selling expenses

This helps accurately calculate your profit (and potential tax liability).

How Eric Berman REALTOR Helps

Eric helps sellers by:

• Estimating net proceeds after taxes and fees

• Coordinating with attorneys and accountants for accuracy

• Providing insight into how taxes may affect your selling timeline and pricing strategy

Final Thoughts

Taxes shouldn’t come as a surprise at closing. By planning ahead and working with experienced professionals, you can minimize your tax burden and make informed financial decisions.

Want a clear breakdown of your potential sale proceeds?

Contact Eric Berman REALTOR today for a personalized estimate and local guidance.

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What taxes do you pay when selling a Long Island home? Eric Berman REALTOR explains capital gains, exemptions, and local fees to help you prepare.