My family's 71-acre estate has multiple houses on it -- my house, my brother's house, my sister's occasional-use cottage, and a caretaker's house -- plus outbuildings including a horse barn some neighbors use. If we sell the whole estate for over $1 million, is any of it exempt from New York's Real Property Transfer Gains Tax as our residence?

Plain-English summary

This tax no longer exists. New York's Real Property Transfer Gains Tax (former Article 31-B of the Tax Law) was a 10% tax on the GAIN from transferring New York real property where consideration was $1 million or more. It was repealed for any transfer occurring on or after June 15, 1996. This 1994 opinion is preserved here for historical and research value, not as current law.

The McIntyre family's 71-acre estate in Dix Hills (Town of Huntington, Suffolk County) had been in the family since 1923, growing to its current size with a 1943 addition. By the time of the sale to a developer for $6,550,000, the property held four residences and nine outbuildings (including a horse barn some neighbors used, in exchange for contributing toward its upkeep costs -- never depreciated for tax purposes). Ownership was split three ways: a 4.31-acre parcel gifted in 1953 to one sibling and spouse, who lived there; a 7.16-acre parcel gifted in 1955 to another sibling and spouse, who also lived there; and a roughly 60-acre remainder that all the children inherited as tenants in common after their father's 1967 death and stepmother's 1984 death. That remainder included a residence used periodically by a sibling based mostly in California (who still made regular use of the pool, grounds, and stable during her visits), plus a caretaker's residence and the outbuildings.

New York's now-repealed gains tax exempted property "occupied by the transferor as his residence" (former § 1443.2), and the Department's own regulations clarified that this reaches: (1) land ABUTTING a residence, as long as that land was never used for a business purpose; and (2) a summer or otherwise secondary residence, not just a primary one -- the exemption doesn't require the property to be the transferor's main home. Applying those rules, the Department found every occupied structure on the estate qualified as somebody's residence -- including the California sibling's only-occasional-use cottage, since occasional use still counts as residential use rather than commercial use. And because the neighbors' incidental payments for horse-barn upkeep were never treated as business income (no depreciation taken, and the amounts were just enough to cover maintenance), that use didn't disqualify the barn or the surrounding acreage either. The Department concluded the ENTIRE 71-acre transfer, including the tenant-in-common remainder, was exempt from the gains tax.

What this means for you

Families selling a multi-generational estate with several residences

Under this now-repealed tax, a large family compound with multiple residences owned different ways (individual ownership, tenancy in common, etc.) could still qualify entirely for the residential exemption, as long as every part of it was genuinely used residentially -- not necessarily by the same person, and not necessarily as anyone's primary or year-round home. A vacation or occasional-use cottage counted just like a full-time residence.

Owners with income-producing outbuildings on residential land

Incidental payments from neighbors or others for use of a barn, garage, or similar structure didn't automatically convert your property into disqualifying "business" property -- what mattered was whether you treated it as a business asset (most concretely, whether you depreciated it for tax purposes) versus merely covering its upkeep costs.

Accountants and real estate attorneys valuing multi-parcel family estate sales

This ruling is a useful example of applying the abutting-land and summer-residence regulations together across a genuinely large, multi-owner, multi-structure property, rather than the more typical single-house scenario.

Common questions

Q: Does the residence exemption still apply to family estate sales today?
A: No. The Real Property Transfer Gains Tax was repealed for transfers on or after June 15, 1996, so this specific exemption no longer applies to current sales.

Q: Does a residence have to be your primary home to qualify?
A: No, under this now-repealed rule -- the Department's own regulations confirmed a summer or other secondary residence qualified for the exemption just as a primary residence did.

Q: Does letting a neighbor use an outbuilding for a fee disqualify the property?
A: Not automatically. Here, nominal payments that only covered the barn's maintenance costs, with no depreciation ever claimed, were treated as incidental rather than a disqualifying business use.

Q: Can another family with a similar multi-residence estate rely on this ruling?
A: No, apart from the repeal -- an Advisory Opinion binds the Department only as to the petitioners and facts described, and this kind of exemption analysis is highly fact-specific.

Citations and references

Statutes and regulations:

• former Tax Law § 1441 (imposition of the gains tax at 10% of gain, for transfers with consideration of $1 million or more)
• former Tax Law § 1443.1 (the $1 million exemption)
• former Tax Law § 1443.2 (personal residence exemption, limited to the portion occupied and used residentially)
• former 20 NYCRR § 590.24(a) (a personal residence sold for over $1 million is exempt)
• former 20 NYCRR § 590.24(b) (a summer residence, not just a primary residence, qualifies for the exemption)
• former 20 NYCRR § 590.24(f) (the exemption includes land abutting the residence not used for business; land sold separately from the dwelling does not qualify)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/real_prop_tran_ao_1994.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/real_property/a94_11r.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-94 (11) R
Real Property Transfer
Gains Tax
October 18, 1994

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M940811E

On August 11, 1994, a Petition for Advisory Opinion was received from Randall P. McIntyre,
et al., Half Hollow Road, Dix Hills, New York 11746.
The issue raised by Petitioner, Randall P. McIntyre, et al., is whether the transfer of the
family homestead by Randall P. McIntyre, Helen Pond McIntyre, Angus P. McIntyre, Barbara
Eckhardt McIntyre, and Sally McIntyre Lewis (collectively referred to herein as "McIntyre") is
subject to the Real Property Transfer Gains Tax (hereinafter the "gains tax").
The property to be transferred consists of a family homestead originally purchased by Otto
E. McIntyre, (hereinafter the "father") the deceased father of Randall, Angus and Sally McIntyre
(collectively the "children"). The family estate consists of a 71± acre parcel improved with four
residences and nine outbuildings, including a horse barn. The estate is located in a residential area
of the Town of Huntington, Suffolk County, New York, known as Dix Hills. The McIntyre's have
contracted to sell the land and improvements thereon to a developer for $6,550,000.
The children grew up on the estate, the core portion of which has been owned continuously
by the father and the McIntyre family since 1923. An additional portion was added as protection in
1943 to complete the 71± acre parcel. Randall and his wife Helen, as well as, Angus and his wife
Barbara, currently occupy residences on the premises. Sally's principal residence is in Santa Barbara,
California, but has continued to reside on the estate from time to time making regular use during
such times of the pool, grounds and stable. During her stays, she resides in a cottage, which is on Lot
34 of the estate.
For various family and estate planning purposes, the parents of the children either gifted or
devised the estate to them in various ways. In 1953, the father made a gift of a 4.31 acre parcel to
Angus and Barbara McIntyre. In 1955, the father made a gift of a 7.16 acre parcel to Randall and
Helen McIntyre. When the father died in 1967, the children and their stepmother each inherited 58.5
acres in equal undivided interests. Upon the stepmother's death in 1984, the children succeeded to
her interest. Moreover, the stepmother left an .8 acre parcel of property to the sons and daughters of
the McIntyre's. Such parcel was subsequently purchased by the children and title is held as tenants
in common.
There are no boundary lines or fences which demark division lines between the lands the
children own as tenants in common and the lands individually gifted to the children and/or their
spouses. The entire estate has always been considered the family homestead by the children and the
McIntyre's and has been used continuously on a strictly residential basis.

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TSB-A-94 (11) R
Real Property Transfer
Gains Tax
October 18, 1994
A few neighbors of the McIntyre's use the horse barn and give money to them to meet the
expenses of maintaining it. However, the McIntyre's do not depreciate the barn for income tax
purposes. Moreover, the father's house is currently occupied by a part-time caretaker who performs
miscellaneous carpentry tasks on the estate in exchange for rent.
Pursuant to Sections 1441 and 1443.1 of the Tax Law and Section 590.1 of the Gains Tax
Regulations the gains tax is a ten percent tax on the gain derived from the transfer of real property,
which includes the acquisition or transfer of a controlling interest in any entity with an interest in real
property, where the property is located in New York State and where the consideration for the
transfer is one million dollars or more.
Section 1443 of the Tax Law provides, in part, as follows:
Sec. 1443. Exemptions.--A total or partial exemption shall be allowed in
the following cases:
*
*
*

2. If the real property consists of premises occupied by the transferor as his
   residence (but only with respect to that portion of the premises actually occupied and
   used for such purposes).
   Section 590.24 of the Gains Tax Regulations provides, in part, as follows:
   (a) Question: Is the sale of an individual's personal residence subject to the
   gains tax where the consideration received is in excess of $1 million?
   Answer: No. Section 1443(2) of the Tax Law specifically exempts from the
   gains tax the sale of premises occupied by the transferor exclusively as his residence.
   (b) Question: Is the sale of the premises occupied and used solely by the
   transferor as his summer residence subject to the gains tax?
   Answer: No. The exemption does not state that it must be the transferor's
   primary residence. Thus, a summer residence qualifies for the exemption.
   *

*

*

(f) Question: When a residence is sold, does all of the land abutting the
residence qualify for the exemption?
Answer: Yes. A residence includes all the land on which the dwelling is
located and the land abutting the dwelling as long as the abutting land was never used
for business purposes (e.g., farm, rental, etc.) (See section 590.25 of this Part for a
discussion on property used for business.) However, the land alone is not a residence

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TSB-A-94 (11) R
Real Property Transfer
Gains Tax
October 18, 1994
and thus where part of the land is sold separately, the portion or portions sold without
the dwelling will not qualify for the residential exemption found in section 1443(2)
of the Tax Law.
Pursuant to Section 1443.2 of the Tax Law and Sections 590.24(a), (b) and (f) of the Gains
Tax Regulations the transfer of real property consisting of premises occupied by the transferor as a
residence, including premises occupied and used solely by the transferor as a summer residence and
land abutting the residence which was not used for a business purpose, is exempt from the gains tax.
In the instant case, the 71± acre parcel of real property to be transferred consists of a 4.31 acre parcel
owned and occupied by Angus and Barbara McIntyre as their personal residence, a 7.16 acre parcel
owned and occupied by Randall and Helen McIntyre, and a 60± acre parcel which abuts the
aforementioned parcels owned as tenants in common by the children. The 60± acre parcel contains
two additional residences, one of which is used periodically by Sally McIntyre Lewis as her
residence and the other which is used by the part-time caretaker as his residence. In addition, the 60±
acre parcel contains nine outbuildings, none of which are used by the transferors for business
purposes, except that a nominal fee is paid to the transferors by neighbors for use of a horse barn.
Accordingly, pursuant to Section 1443.2 of the Tax Law and Sections 590.24(a), (b) and (f)
of the Gains Tax Regulation since the premises owned and occupied by Angus and Barbara McIntyre
was used solely as their residence, the premises owned and occupied by Randall and Helen McIntyre
was used solely as their residence and the appurtenant acreage abutting such premises owned as
tenants in common by the children was used solely as a residence of the children the transfer by the
McIntyre's of the 71± acre parcel for a consideration in excess of $1 million is not subject to the
gains tax. Further, it is noted that since the horse barn was not depreciated for income tax purposes
and the money received by the transferor from its neighbors for use of the barn was incidental to
meet the expenses of maintaining it, that such use is not deemed to be use for a business purpose.

DATED: October 18, 1994

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The-opinions expressed in Advisory opinions
are limited to the facts set forth therein.