STATE OF NEW YORK

DEPARTMENT OF TAXATION AND FINANCE

COMMISSIONER OF TAXATION AND FINANCE

ALBANY, NEW YORK

Pursuant to the authority contained in subdivision First of section 171, section 663 and subsection (a) of section 697 of the Tax Law, the Commissioner of Taxation and Finance, at an open meeting held on even date with the signing of this adoption, hereby makes and adopts as an emergency measure the following amendments to the New York State Personal Income Tax Regulations, as published in Subchapter A of Chapter II of Title 20 of the Official Compilation of Codes, Rules and Regulations of the State of New York, such amendments to read as follows:

Section 1. A new part 163 is added to such regulations to read as follows:

PART 163

ESTIMATED PERSONAL INCOME TAX DUE UPON THE SALE OR TRANSFER OF REAL PROPERTY BY A NONRESIDENT TAXPAYER

(Statutory authority: Tax Law, §§171, 663, 697)

Sec.

163.1	General and definitions

163.2	Estimation of tax due

163.3	Filing, payment, and certification

163.4	Exemption from requirements

163.5	Certification requirements for recording of deed

Section 163.1 General and definitions.

(a) Section 663 of the Tax Law requires that a nonresident taxpayer must estimate and pay the personal income tax liability on the gain, if any, upon the sale or transfer of real property within New York State. For purposes of this requirement, the following rules and definitions apply:

(1) "Date of sale or transfer" is the date the deed affecting the conveyance is delivered by the seller or transferor to the transferee.

(2) "Nonresident taxpayer." (i) A nonresident taxpayer is an individual who qualifies as a nonresident individual under section 605(b)(2) of the Tax Law, or an estate or trust that qualifies as a nonresident estate or trust under section 605(b)(4) of the Tax Law, on the date of sale or transfer of real property.

(ii) An individual who is not domiciled in New York State but who may be considered a resident of New York State for tax purposes under section 605(b)(1)(B) of the Tax Law at the end of a taxable year, by virtue of maintaining a permanent place of abode in New York State for substantially all of the taxable year and by spending in aggregate more than one hundred eighty-three days of the taxable year in New York State, is a nonresident for purposes of this requirement unless the individual has already qualified as a resident on the date of sale or transfer of real property. (See section 105.20 of this Title concerning qualifying as a resident under section 605(b)(1)(B).)

(3) "Gain" on the sale or transfer has the same meaning as used in section 1001 of the Internal Revenue Code as that section applies to the sale or transfer of real property.

(4) "Sale or transfer of real property" means the change of ownership of a fee simple interest in real property by any method.

(5) "Seller or transferor" means the individual, estate, or trust making the sale or transfer of a fee simple interest in real property.

Section 163.2 Estimation of tax due.

(a) A nonresident taxpayer must estimate the personal income tax due on a form prescribed by the commissioner, using an estimated tax rate that equals the highest rate of tax for the taxable year provided in section 601 of the Tax Law. The estimated tax due will equal the gain, if any, multiplied by that rate. The amount of the gain used in the computation is equal to the amount reportable for federal income tax purposes for the taxable year.

(b) If the real property being sold or transferred is located partly within and partly without New York State, then the nonresident taxpayer must estimate the tax due using only the portion of the gain reasonably attributable to the portion of the real property located within New York State.

(c) If the nonresident taxpayer is an estate or trust, it must estimate the tax due based on the gain, if any, computed without reduction for any distribution of income to the beneficiaries during the tax year of the sale or transfer.

Section 163.3 Filing, payment, and certification.

(a) A nonresident taxpayer must file the estimated tax form with the commissioner, along with payment of any estimated tax due, using the procedures prescribed in such form and accompanying instructions. Except for a nonresident taxpayer who meets one of the exemptions from the requirements described in section 163.4 of this Part, all nonresident taxpayers who are sellers or transferors of real property within New York State must file the estimated tax form whether or not they have a gain.

(b) After the required form and payment have been received, the commissioner will provide the nonresident taxpayer with a certification of receipt of the filing and payment made by the taxpayer. This certification will be provided only when the estimated tax shown due on the form, if any, is paid in full.

Section 163.4 Exemption from requirements.

(a) Section 663(d) of the Tax Law provides that the requirements of section 663 do not apply where:

(1) the real property being sold or transferred is the principal residence of the seller or transferor within the meaning of section 121 of the Internal Revenue Code (see subdivision (b) of this section);

(2) the seller or transferor is a mortgagor conveying the mortgaged property to a mortgagee in foreclosure or in a transfer in lieu of foreclosure with no additional consideration (see definition of "consideration" in section 575.1(d) of this Title); or

(3) the seller or transferor, or transferee is an agency or authority of the United States of America, an agency or authority of New York State, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, or a private mortgage insurance company.

(b) The principal residence exemption set forth in paragraph (a)(1) of this section applies only where the property being sold or transferred is used exclusively as the principal residence of the seller or transferor. If the property being sold or transferred includes both the principal residence and other property, then the taxpayer must file and pay any estimated tax due based on the gain from the other property.

Section 163.5 Certification requirements for recording of deed.

(a) No deed shall be recorded by any recording officer unless the recording officer has received with respect to every seller or transferor who is an individual, estate or trust: (1) a certification by the commissioner that the individual, estate or trust has filed and paid the estimated tax due, if any, or, (2) a certification by the individual, estate or trust that section 663 is inapplicable to the sale or transfer. The method for taxpayers to make the latter certification is prescribed in forms and instructions. For purposes of section 663(e), a recording officer means the county clerk of the county, except in a county having a register, where it means the register of the county, or in the city of New York where it means the city register.

Section 2. These amendments shall take effect on the day such amendments are filed with the Department of State, and shall apply to all sales or transfers of real property within New York State by taxpayers subject to Article 22 of the Tax Law on or after September 1, 2003.

Dated: Albany, New York

August 26, 2003

_______________________________

Arthur J. Roth

Commissioner of Taxation and Finance