New York taxes capital gains as ordinary income at rates up to 10.9% — and New York City residents add a local tax on top — so selling appreciated real estate can cost a third or more of the gain when stacked with federal tax. A 1031 exchange into a Delaware Statutory Trust lets New York investors defer the combined bill and exchange active rentals for passive institutional real estate.
The New York tax math
Here's the tax stack on a long-held rental sold for a $1.5M gain (excludes depreciation recapture, taxed separately at up to 25%):
| On a $1.5M gain | Tax |
|---|---|
| Federal long-term capital gains (20%) | $300,000 |
| Net investment income tax (3.8%) | $57,000 |
| New York income tax (10.9%) | $163,500 |
| Total if you simply sell | $520,500 |
| Tax if you 1031 into a DST | $0 deferred if the exchange qualifies under IRC §1031 |
In New York's top bracket, roughly the combined rate above goes to tax if you sell outright — versus $0 now with a qualifying 1031 exchange. Run your New York numbers →
New York 1031 rules
Rules summarized as of 2026 — verify with your tax advisor.
Conforms to federal §1031
New York conforms to IRC §1031, so a qualifying exchange defers New York tax as well as federal tax. Nonresidents selling NY property typically must remit estimated tax with Form IT-2663 at closing unless the gain is deferred in a 1031 exchange.
Withholding at sale
Nonresidents generally prepay estimated tax at closing via Form IT-2663 unless a 1031 exemption applies. To preserve deferral, a qualified intermediary must hold the sale proceeds — you cannot take receipt of the funds.
How gains are taxed
Taxed as ordinary income (no preferential rate); NYC residents add city tax (~3.876%).
New York market snapshot
Hypothetical, illustrative figures for general education only — not current market data, a valuation, or an offer.
Baker 1031 in New York
Realized (acquired, held, sold) programs on New York assets. Sponsor-reported, net-to-investor, not independently verified; past performance is not indicative of and does not guarantee future results.
| Program | Sponsor | Avg annual | Equity × | Hold |
|---|---|---|---|---|
| Austell Place Equities LLC — Long Island City | Time Equities | 25.18% | 12.51x | 14.33 yr |
| 124 Hudson Street TIC — New York | Time Equities | 8.68% | 2.42x | 12.05 yr |
| Rite Aid — Cicero | AEI | 5.20% | 1.25x | 19.22 yr |
See every New York deal in the Data Center →
Current offerings for New York investors
DST sponsors based in New York
This list reflects sponsor headquarters location only. It does not imply a current offering, partnership, or endorsement by any firm named, and availability changes over time.
Learn more
New York FAQ
What is the capital gains tax rate in New York?
New York taxes capital gains as ordinary income, up to a 10.9% top rate, with no preferential long-term rate. New York City residents add a local income tax (about 3.876%). Combined with the federal 23.8%, a high-bracket New Yorker can face roughly 35% or more on a real estate gain.
Does New York recognize 1031 exchanges?
Yes. New York conforms to IRC §1031, so a properly structured exchange defers New York tax as well as federal tax.
What is Form IT-2663?
Form IT-2663 is New York's nonresident real property estimated income tax form. Nonresidents selling New York property generally must pay estimated tax at closing — unless the gain is deferred through a qualifying 1031 exchange.
Disclosures
This page is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. State tax and 1031 rules summarized here are general, current as of 2026, and not tax advice — verify with your CPA and attorney. For accredited investors only. Representatives may transact business only in states where registered or exempt. Securities offered through Aurora Securities, Inc., member FINRA/SIPC; Baker 1031 Investments, LLC is independent of Aurora. Performance shown is sponsor-reported, realized programs only, net of fees, not independently verified, and not indicative of future results.
Any offering is made only by means of a confidential Private Placement Memorandum (PPM), which contains complete information on risks, fees, and terms and controls in the event of any conflict with this page.
DST interests are illiquid, are not listed on any exchange, and generally cannot be sold before the sponsor's disposition of the underlying property; hold periods often run 5–10 or more years. There is no established secondary market for these interests.