I sold two parcels of land on the same road to the same buyer on the same day, but they're separated by a third parcel owned by a completely unrelated party. Do I have to add the two sale prices together to test New York's $1 million Real Property Transfer Gains Tax threshold, since they're roughly in the same area?

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 It was repealed for any transfer occurring on or after June 15, 1996.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 1995 opinion is preserved here for historical and research value, not as current law.

Gick Road Development Corp. owned two parcels of land on the east side of Old Gick Road in Glens Falls, New York. The first was a narrow 1.24-acre strip (a former railroad bed) used as part of a mobile home park; the second, starting about 124 feet further up the road, was a larger 14.74-acre triangular parcel held as vacant investment land. Both parcels were sold to Wal-Mart on the same day (April 27, 1993) by separate deeds -- $489,000 for the smaller parcel and $2,779,478 for the larger one. The wrinkle: the 124 feet of road frontage between the two Gick Road parcels belonged to a completely unrelated, uncooperative third party.

The gains tax's aggregation rule (former § 1440.7, applied through former 20 NYCRR § 590.42) generally required combining the consideration from CONTIGUOUS or ADJACENT parcels sold to the same buyer, to prevent artificially splitting a large transfer into pieces under the $1 million threshold. The key precedent, Matter of Fred M. Calandra and Salvatore C. Calandra, had held that two parcels separated only by a public county road were still "adjacent" -- because a road isn't "of the same kind" as the properties on either side, so it doesn't break the adjacency. Applying that same logic here, the Department reached the opposite result: the land separating Gick Road's two parcels wasn't a road or similar buffer -- it was privately owned real estate, the SAME KIND of property as the parcels being sold, owned by someone with no connection to Gick Road or to the sales. That meant there WAS "something of the same kind in between," so the two parcels were not "adjacent" within the meaning of the regulation, and their sale prices did not need to be aggregated for the $1 million exemption test.

What this means for you

Landowners selling multiple nearby (but not touching) parcels to the same buyer

Under this now-repealed rule, physical proximity alone didn't trigger aggregation -- what separated your parcels mattered as much as how close together they were. A public road or similar non-real-estate buffer between parcels didn't break "adjacency" (so aggregation still applied), but a THIRD PARTY'S UNRELATED privately-owned land in between did break it, taking the combined sales outside the aggregation rule.

Developers and buyers assembling adjacent parcels from multiple sellers

This opinion's reasoning (drawing the "adjacent" line at whether the intervening property is "of the same kind") could matter whenever you're structuring a purchase of multiple nearby parcels and want to understand how a seller's own tax exposure might be analyzed on their end.

Accountants and real estate attorneys reviewing pre-1996 multi-parcel sales

If you're reconstructing the gains-tax aggregation analysis for an old multi-parcel transaction, this ruling and the Calandra case it applies are the key authorities for what does and doesn't break "adjacency" between separately-deeded parcels sold to the same buyer.

Common questions

Q: Does this aggregation analysis still matter for multi-parcel sales today?
A: No. The Real Property Transfer Gains Tax was repealed for transfers on or after June 15, 1996, so this specific $1 million aggregation test no longer applies.

Q: Why did a public road not break "adjacency" in the precedent case, but an unrelated owner's land did break it here?
A: The Tax Appeals Tribunal's test asked whether there was "an absence of anything of the same kind in between." A road is a different kind of thing from the real estate parcels on either side, so it didn't count as "something of the same kind." An ordinary parcel of land -- even if owned by someone else entirely unrelated -- IS the same kind of thing as the parcels being sold, so it did count, breaking adjacency.

Q: Would the result have been different if the taxpayer owned the intervening parcel too?
A: This opinion doesn't address that scenario directly, but the underlying regulation's aggregation trigger is about contiguous or adjacent parcels sold to the SAME transferee -- ownership of the gap parcel by the seller could raise a different set of facts not analyzed here.

Q: Can another seller with a similar layout rely on this specific ruling?
A: No, apart from the repeal -- an Advisory Opinion binds the Department only as to the petitioner and facts presented, and adjacency determinations are fact-specific to the exact distances and ownership involved.

Citations and references

Statutes and regulations:

• former Tax Law § 1440.1 (definition of "consideration": the price paid or required to be paid for the real property transferred)
• former Tax Law § 1440.7 (definition of "transfer of real property," including aggregation of contiguous or adjacent parcel transfers to the same transferee)
• former Tax Law § 1441 (imposition of the gains tax at 10% of gain from real property transfers)
• former Tax Law § 1443.1 (the $1 million exemption)
• former 20 NYCRR § 590.42 (contiguous or adjacent parcels sold to one transferee are generally aggregated for the $1 million exemption test, unless the only correlation is contiguity itself and the properties weren't used for a common or related purpose)

Case law cited:

• Matter of Fred M. Calandra and Salvatore C. Calandra, Dec. Tax App. Trib., Nov. 13, 1987, TSB-D-89(6)-R (two parcels separated only by a public county road were still "adjacent," since a road is not "of the same kind" as the properties on either side)
• Louis Bombart v. State Tax Commission, 516 N.Y.S.2d 989 (cited for the broad statutory purpose underlying Article 31-B's aggregation provisions)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/real_prop_tran_ao_1995.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/real_property/a95_3r.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-95 (3)R
Real Property
Transfer Gains Tax
April 21, 1995

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M950109A

On January 9, 1995, a Petition for Advisory Opinion was received from Gick Road
Development Corp., One Washington Street, c/o Alan R. Rhodes, Esq., Glens Falls, New York
12801.
The issue raised by Petitioner, Gick Road Development Corp., was whether the consideration
received from the sale of two parcels of real property located on the same side of a street, separated
by another parcel of real property owned by an unrelated party, and not otherwise touching or
connected by easement, right-of-way, or other means to each other, was required to be aggregated
for gains tax purposes under Section 1440.7 of the Tax Law when sold by the same transferor to the
same transferee.
Petitioner owned two parcels on the east side of Old Gick Road. The first parcel, comprising
approximately 1.24 acres, was a 65-foot wide strip, a former railroad bed, extending from its 65-foot
road frontage on Old Gick Road east-northeast approximately eight hundred thirty feet. This property
was used by Petitioner as part of a mobile home park. This strip is surrounded on both sides by
private property not owned by Petitioner.
Approximately 124 feet of road frontage north of this strip, Petitioner's second parcel begins
at a point which follows the road for 1380 linear feet and fans back in a triangular shape comprising
14.74 acres. The intervening 124 feet of road frontage is the narrow tip of a substantial parcel owned
by another person who is not related and is completely independent of Petitioner, and with whom
Petitioner has not had any success in obtaining cooperation or coordination of any kind in relation
to sales to third parties. This triangular second parcel is bounded by the road, the other person's
property from the southernmost road frontage across the eastern side due north, and by a third
unrelated party's property across the north back to the road. This parcel was undeveloped and held
as vacant land for investment by Petitioner.
The first parcel was sold by Petitioner by separate deed to Wal-Mart for $489,000 on April
27, 1993. The second parcel was sold by Petitioner by separate deed to Wal-Mart for $2,779,478 also
on April 27, 1993. Petitioner treated the parcels as separate sales because the properties were neither
adjacent nor contiguous.
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

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Real Property
Transfer Gains Tax
April 21, 1995
property, where the property is located in New York State and where the consideration for the
transfer is one million dollars or more.
Section 1440.1 of the Tax Law defines the term "consideration," in pertinent part, to mean
the price paid or required to be paid for real property or any interest therein, less any customary
brokerage fees related to the transfer if paid by the transferor . . . whether expressed in a deed and
whether paid or required to be paid by money, property, or any other thing of value.
Section 1440.7 of the Tax Law, as it existed at the time of the transfers which are the subject
of this petition, provided, in pertinent part, as follows:
7.
"Transfer of real property" means the transfer or transfers of any interest in
real property by any method, including but not limited to sale, exchange, assignment,
surrender, mortgage foreclosure, transfer in lieu of foreclosure, option, trust
indenture, taking by eminent domain, conveyance upon liquidation or by a receiver,
or transfer or acquisition of a controlling interest in any entity with an interest in real
property.
*

*

*

Transfer of real property shall also include partial or successive transfers,
unless the transferor or transferors furnish a sworn statement that such transfers are
not pursuant to an agreement or plan to effectuate by partial or successive transfers
a transfer which would otherwise be included in the coverage of this article, and the
transfer of real property by tenants in common, joint tenants or tenants by the
entirety, provided that the subdividing of real property and the sale of such
subdivided parcels improved with residences to transferees for use as their
residences, other than transfers pursuant to a cooperative or condominium plan, shall
not be deemed a single transfer of real property. (emphasis added)
Section 590.42 of the Gains Tax Regulations, as it existed at the time of the transfers which
are the subject of this petition, provided as follows:
590.42 Contiguous or adjacent parcels.
Question: Is the consideration received by a transferor for the transfer of
contiguous or adjacent parcels of property to one transferee added together for
purposes of applying the $1 million exemption?
Answer: Generally, yes. A transfer of real property is defined in section
1440(7) of the Tax Law to mean "the transfer or transfers of any interest in real
property." Thus, the separate deed transfers of contiguous or adjacent properties to
one transferee are, for purposes of the gains tax, a single transfer of real property. It
is the consideration for the interests in a single transfer, regardless of the number of
deeds used to transfer the property, that is used to determine the application of the $1
million exemption.

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Transfer Gains Tax
April 21, 1995
However, if the transferor establishes that the only correlation between the properties
is the contiguity itself, and that the properties were not used for a common or related
purpose, the consideration will not be aggregated.
When the transfer is to more than one transferee, whether the amount paid for each
deed transfer is added together depends on whether the transferor is subject to the
aggregation clause for partial or successive transfers. (See section 590.43 of this
Part). (emphasis added)
In the Matter Fred M. Calandra and Salvatore C. Calandra, Dec Tx App Trib, November 13,
1987, TSB-D-89(6)-R the Tax Appeals Tribunal in determining whether the Division of Taxation
properly aggregated consideration received by the petitioners upon their transfer of two properties
held as follows:
"F. The 160 Sugg Road and 195 Sugg Road parcels were 'adjacent' to one another
within the plain meaning of that word and within the meaning of 20 NYCRR 590.42.
The term adjacent 'may or may not imply contact but always implies an absence of
anything of the same kind in between.' (Webster's Ninth New Collegiate Dictionary
56 [1984]). In the context of 20 NYCRR 590.42 the term is used as an alternative to
the more rigidly defined 'contiguous' which 'implies having contact' (Webster's Ninth
New Collegiate Dictionary 56 [1984]). Thus, in the present context the term adjacent
refers to circumstances wherein properties are not physically in contact but which are
in close proximity with an 'absence of anything of the same kind in between.' In the
situation at issue, the parcels are indeed in close proximity as they are separated only
by approximately 65 feet of county-owned property consisting of a two-lane county
road and its shoulders. The county road is certainly not 'of the same kind' as the
properties at issue, inasmuch as petitioners had immediate access to the road and had
the right to use the road at all times. Sugg Road and its shoulders do not, therefore,
separate the properties to a degree which would result in a finding of nonadjacency.
G. It is noted that the foregoing interpretation of 20 NYCRR 590.42 is in accord
with the broad statutory language of Tax Law Section 1440(7) and 1448(1) and
legislative purposes underlying the enactment of Article 31-B (see Louis Bombart v.
State Tax Commission, 516 NYS2d 989)."
In the instant case, Petitioner transferred two parcels of real property located on the same side
of 01d Gick Road to one transferee. Such properties were not touching or connected by easement,
right-of-way or other means to each other and were separated by another parcel of real property
owned by an unrelated third party. In Fred M. Calandra and Salvatore C. Calandra, supra, the Tax
Appeals Tribunal held that the term adjacent refers to circumstances wherein properties are not
physically in contact but which are in close proximity with an absence of anything of the same kind
in between. While the two parcels transferred by Petitioner were in close proximity to one another,
they were separated by a property of a similar kind owned by an unrelated third party. Therefore, in

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April 21, 1995
accordance with Fred M. Calandra and Salvatore C. Calandra, supra, since the two parcels were
separated by a property of a same kind which was owned by an unrelated third party such properties
are not deemed to be adjacent.
Accordingly, since the properties transferred by Petitioner were not contiguous or adjacent
to one another, pursuant to Section 1440.7 of the Tax Law, Section 590.42 of the Gains Tax
Regulations and Fred M. Calandra and Salvatore C. Calandra, supra, such transfers are not deemed
a single transfer. Therefore, the consideration received by Petitioner from the transfer of the
properties was not required to be aggregated.

DATED: April 21, 1995

/s/
PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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