Selling a Westbury home or cashing out a rental can trigger more taxes than you expect. Between property tax cycles, New York transfer taxes, and capital gains, it pays to plan ahead. You want a smooth closing and a clear picture of what you keep after taxes. In this guide, you’ll learn how Westbury property taxes work, what shows up on your settlement statement, and how capital gains, depreciation recapture, and 1031 exchanges affect your bottom line. Let’s dive in.
Westbury property taxes at a glance
Property taxes in Westbury include school district, town, county, village, and special district levies. School taxes are often the largest share of the bill. If your property sits inside the Incorporated Village of Westbury, you will also see village taxes on your bill. For payment schedules and contacts, visit the Village of Westbury’s tax page and confirm current deadlines and procedures on the official site: Village of Westbury tax collection.
How assessments and deadlines work
New York uses a valuation date and a taxable status date to build the assessment roll each year. The state Office of Real Property Tax Services explains how these dates control what appears on the roll and when exemptions are due; local calendars can vary, so always confirm with the Town of North Hempstead or the village assessor. Review the state’s overview here: assessment roll, valuation, and taxable status dates.
Exemptions and relief to review
If the property is your primary residence, look into school tax relief programs such as STAR and Enhanced STAR, which are administered by New York State and paid based on eligibility. Other exemptions, such as senior, veteran, or disability, may be available and typically require filing by the taxable status date. Because program income limits and payments change, confirm current rules with the local assessor and state guidance.
Contesting an assessment
If you believe your assessment is too high, New York provides a grievance process through the Board of Assessment Review, followed by Small Claims Assessment Review or an Article 7 proceeding. Timing is tied to the tentative and final roll dates. Start with the state’s process overview to understand the steps and deadlines: contest your assessment basics.
Closing taxes and forms in Westbury
NY transfer tax and mansion tax
New York State imposes a Real Estate Transfer Tax of $2 per $500 of consideration, which is about 0.4 percent. A separate 1 percent mansion tax applies to residential sales of 1,000,000 dollars or more outside New York City. These are reported on Form TP‑584 at recording. Learn more from the state: New York real estate transfer tax and TP‑584.
Recording fees and mortgage recording tax
Expect county recording fees at deed recording. If the buyer finances with a mortgage, New York may also collect a mortgage recording tax that varies by amount and location. Your settlement agent will itemize these charges on your closing statement.
Information returns and nonresident withholding
Most real estate closings generate Form 1099‑S, which reports sale proceeds to the IRS. You will receive a copy for your tax records. Review the filing rules here: IRS Form 1099‑S instructions. If you are a nonresident seller, New York may require estimated tax withholding at closing using Form IT‑2663 or IT‑2664. See the state’s transfer tax page for related filing information: NYS transfer tax overview.
Capital gains when you sell
Short term vs. long term
If you held the property for one year or less, any gain is short term and taxed at ordinary federal income rates. If you held it for more than one year, it is long term and taxed at preferential federal rates of 0, 15, or 20 percent, depending on your taxable income. Higher earners may also owe the 3.8 percent Net Investment Income Tax. For a refresher on brackets and thresholds, review this summary: capital gains tax rates overview.
Home sale exclusion (Section 121)
If the property was your main home and you meet the ownership and use tests, you may exclude up to 250,000 dollars of gain if single, or 500,000 dollars if married filing jointly. Periods of rental or business use can affect the exclusion, and any depreciation claimed after 2008 cannot be excluded. See the IRS guidance for examples and exceptions: selling your home tax tips.
Landlords and depreciation recapture
Rental property owners must account for depreciation taken during ownership. Depreciation lowers your basis and increases gain, and the portion of gain attributable to depreciation is generally treated as unrecaptured Section 1250 gain, taxed up to 25 percent at the federal level. Reporting rules are covered in IRS Publication 544: Sales and Other Dispositions of Assets.
New York State tax on your gain
New York taxes capital gains as ordinary income under its state income tax schedule. Plan for state income taxes in addition to federal taxes, and pay close attention to nonresident withholding if you live outside New York. For context on state taxation, see this overview: state tax levels reference.
1031 exchanges for investment property
If your Westbury property is held for investment or business use, a Section 1031 like‑kind exchange can defer recognition of gain. You must identify replacement property within 45 days and acquire it within 180 days of the sale, often using a qualified intermediary. The exchange defers tax, including depreciation recapture, but does not eliminate it. Review the IRS guidance: 1031 like‑kind exchange rules.
Estimating your taxable gain
Use this framework to get a rough estimate before you list:
- Adjusted basis = purchase price + capital improvements − allowable depreciation (for rental/business use).
- Amount realized = sale price − selling costs and allowable closing fees.
- Gain = amount realized − adjusted basis. Then apply any home sale exclusion, account for depreciation recapture, and apply federal and New York tax rates as applicable. See the IRS basis FAQ: property basis and sale overview.
Example 1: Main home. You bought for 500,000 dollars, invested 50,000 dollars in improvements, and sell for 800,000 dollars with 40,000 dollars in selling costs. Adjusted basis is 550,000 dollars. Amount realized is 760,000 dollars. Estimated gain is 210,000 dollars, which may be fully excluded under Section 121 if you meet the tests.
Example 2: Rental. You bought for 600,000 dollars, took 150,000 dollars of depreciation, added 30,000 dollars in improvements, and sell for 900,000 dollars with 50,000 dollars in selling costs. Adjusted basis is 480,000 dollars. Amount realized is 850,000 dollars. Estimated gain is 370,000 dollars, with 150,000 dollars potentially treated as unrecaptured Section 1250 gain (up to 25 percent federal), and the balance at long‑term capital gains rates, plus New York state tax.
Pre‑listing and closing checklist
Before you list:
- Gather closing statements from purchase, loan payoff info, and all renovation receipts.
- If you rented the property, request your full depreciation schedules from your tax preparer.
- Estimate adjusted basis and possible gain using the steps above. For rules and definitions, see IRS Publication 544 and home sale guidance.
During contract and closing:
- Expect New York’s TP‑584 transfer tax affidavit, state transfer taxes, and county recording charges on your settlement statement. Learn more here: New York transfer tax overview.
- Expect Form 1099‑S reporting of sale proceeds. Read the IRS 1099‑S instructions.
- If you are a nonresident seller, anticipate New York’s estimated tax withholding rules at closing. Confirm the correct form and amount with your attorney and tax adviser.
After closing:
- Save the Closing Disclosure or HUD‑1, Form 1099‑S, proof of improvements, and any depreciation records.
- If you executed a 1031 exchange, retain the qualified intermediary agreement and all identification and closing records. For rules, review the IRS 1031 guidance.
Work with a local partner
You deserve clarity and a streamlined process from listing through tax reporting. Our Westbury‑based team will help you set the right strategy, organize your documentation, and coordinate timelines that respect transfer‑tax and 1031 deadlines while elevating your property’s presentation. When you are ready to sell or reposition a rental, connect with Panache Real Estate for boutique guidance backed by full‑service operations.
FAQs
How do Westbury property taxes work if I sell mid‑year?
- Property taxes are prorated at closing based on the local billing cycle. Your settlement statement will credit or debit you for the portion of the current tax period you own the home, and you should still follow local deadlines listed by the Village of Westbury tax office.
What New York closing taxes should I expect as a seller?
- Most sales include the state Real Estate Transfer Tax of about 0.4 percent, reported on TP‑584. A 1 percent mansion tax applies to residential sales of 1,000,000 dollars or more outside NYC. See the state rules: NYS transfer tax and mansion tax.
How does the home sale exclusion apply if I rented my Westbury home?
- If you meet the two‑out‑of‑five‑years ownership and use tests, you may exclude up to 250,000 dollars (single) or 500,000 dollars (married filing jointly). Any depreciation claimed after 2008 during rental years generally cannot be excluded and is subject to recapture. Review the IRS guide: selling your home tax tips.
What is depreciation recapture when I sell a rental?
- Depreciation reduces your basis and increases your gain. The portion of gain attributable to depreciation is generally taxed as unrecaptured Section 1250 gain up to 25 percent at the federal level, with reporting rules in IRS Publication 544.
Can I defer taxes with a 1031 exchange on my Westbury rental?
- Yes, if you exchange into other real property held for investment or business and meet strict deadlines: identify within 45 days and close within 180 days. Taxes are deferred, not eliminated. See the IRS 1031 exchange rules.
Will I owe New York State income tax on my gain?
- Yes. New York taxes capital gains as ordinary income under its state schedule, so plan for state tax in addition to federal taxes, and check nonresident withholding rules if you live outside New York. See this reference: state tax levels overview.
