New York's exemption is measured in percentages, not granted in full or refused

The New York Exemption, and the Conditions That Void It

Work out your beneficial ownership before the deed and after it. That comparison is the exemption. A single owner deeding to a single-member LLC has no change in beneficial interest and is exempt in full. A married couple deeding to an LLC they own in the same shares they held the property is in the same position. A sole owner who deeds to an LLC in which a business partner takes a share is exempt only as to the portion that stayed put. The mechanics are Form TP-584 with Form TP-584.1, Schedule F, attached. The Department will not treat the exemption as claimed without the schedule.

The mortgage question in New York has two answers and most pages only give you the first. Tax Law § 1401(d) provides that consideration "shall also include the amount of any mortgage, purchase money mortgage, lien or other encumbrance, whether or not the underlying indebtedness is assumed or taken subject to." That is the general rule, and it is why the warning above applies. But § 1402(a) then carves most single rentals back out through the continuing lien deduction: "in the case of (1) a conveyance of a one- to three-family house and an individual residential condominium unit, or an interest therein; or (2) conveyances where the consideration is less than $500,000, the taxable consideration shall exclude the value of any lien or encumbrance remaining thereon at the time of the conveyance."

A mortgaged two-family house is squarely inside limb (1). The Department's own worked example shows where the deduction stops: on a commercial building whose consideration exceeded the threshold in limb (2), the transfer tax was computed on the full consideration and "the continuing lien deduction is not applicable." Which limb you are in is the question worth answering before you draft.

If the property is in New York City, run the entire analysis a second time. The city's Real Property Transfer Tax is a separate tax with its own rate schedule and its own mere-change exemption, implemented at 19 RCNY § 23-05(b)(8). One sourcing note there: we could not read the underlying Administrative Code section itself, because the code library returned an access-denied error, so the Administrative Code citation carried in the dataset comes from the Department of Finance's own rule numbering rather than from the code as we read it. The substance is first-hand from the Department, the section number is not. Outside the city, Yonkers, Mount Vernon and the towns in the Peconic Bay region levy transfer taxes of their own that we did not attempt to enumerate.

One filing rule catches this audience specifically, and it is the reason an LLC does not buy you a quiet deed in New York. Form TP-584-I provides that where an LLC is the grantor or the grantee and the property is "a building containing up to four family dwelling units," Form TP-584 "cannot be accepted for filing unless accompanied by documentation that identifies all members, managers, and other authorized persons of the LLC," traced through any intermediate entity "until ultimate ownership by natural persons is disclosed." That is exactly the size of building most small landlords own.

There is an exception, and it probably covers you. New York's continuing lien deduction takes the mortgage back out of the base for most small rentals. Tax Law § 1402(a) excludes the value of a lien or encumbrance remaining on the property where the conveyance is of a one-, two- or three-family house or an individual residential condominium unit, and separately where the consideration is under $500,000. If your rental is one of those, and most single rentals are, the mortgage does not swell the taxable consideration the way the general rule above implies. The Department's Form TP-584-I instructions also list a residential cooperative apartment among the qualifying property types, though § 1402(a) itself names only houses and condominium units. On anything larger, the general rule bites.

Whatever the state does, counties and municipalities in New York can levy transfer tax of their own on the same deed. Whether a local exemption follows the state one varies, and it is not safe to assume either way. Check with the recorder for the county the property sits in before you assume the total.

New York also taxes transfers of a controlling interest in an entity that owns real property, which is aimed at the obvious workaround, selling the LLC rather than the building. How far it reaches varies: some states apply it to any realty-holding entity, others only above an ownership threshold or only to commercial property, so whether it touches a residential rental is a question for the state’s own rules rather than something to assume in either direction.

Authority: N.Y. Tax Law § 1405(b)(6); for New York City property, N.Y.C. Admin. Code § 11-2106(b)(8), implemented at 19 RCNY § 23-05(b)(8). nysenate.gov

Does the Transfer Reset Your Property Tax in New York?

No. New York does not cap a property’s assessed value at what you paid for it, assessments track market value on the assessor’s own cycle regardless of who holds title. A deed from you to an LLC you own does not change the assessment, because there was never an acquisition-date value locked in to lose. This is the part of the California story that gets copied onto pages about states where it simply does not apply.

The rule is uniformity, not acquisition value. RPTL § 305(2) requires that "[a]ll real property in each assessing unit shall be assessed at a uniform percentage of value," and the Real Property Tax Law contains no change-of-ownership uncapping event of the kind California and Michigan have. Your assessment moves when your assessing unit revalues, not when your deed is recorded.

What an LLC deed ends is STAR, if the property somehow still carried it. RPTL § 425(3) requires that "[t]he property must serve as the primary residence of one or more of the owners thereof," which a rented property fails on its own terms before the LLC is even involved. The statute does make narrow room for entity-held title, farm dwellings held by an S corporation, C corporation, partnership or limited liability company where the dwelling is the primary residence of a shareholder, partner or owner, and limited partnerships "lawfully created ... for estate planning and asset protection purposes", and neither of those reaches an ordinary rental LLC. A landlord converting a former home should expect STAR to end with the conversion regardless of what happens to the title.

Two limits on this block. The § 305 and § 425 language above was read through a summarising layer after the Senate's statute host began challenging our requests, so we would want the raw § 425(3) text re-read before making any narrower claim about those farm-dwelling and estate-planning carve-outs. And we did not investigate New York City's Class 1 assessment-increase caps under RPTL article 18, which work at the parcel level rather than the ownership level, if you own a Class 1 property in the city, nothing on this page should be taken as describing what those caps do.

Separately, and this catches people converting a former home into a rental: the benefits that turn on owning and occupying the property as your residence, a homestead exemption, an owner-occupancy credit, a residential assessment rate, are not things an LLC occupies a home to earn. Where the property still carries one, the deed puts it at risk, and the bill goes up whether or not the assessment itself moves. Which benefit is at stake, and on what terms, is a question for the assessor in the county the property sits in.

Authority: N.Y. Real Property Tax Law § 305(2); RPTL § 425(3), nysenate.gov

Moving a Property You Already Own Into the LLC in New York

1. 1

   Write down who owns what before, and who will own what after

   That comparison is the whole exemption. Section 1405(b)(6) is measured by beneficial ownership, and the Department applies it to the extent ownership is unchanged. If the answer is identical on both sides, the conveyance is exempt in full. If it's not, work out the changed percentage now, because that's the share the tax will be computed on.

2. 2

   Check which side of the continuing lien deduction your building falls on

   Section 1402(a) excludes a remaining lien or encumbrance from taxable consideration for a one- to three-family house or an individual residential condominium unit, and for conveyances where the consideration is less than $500,000. A financed two-family house sits inside limb (1). A larger or more valuable building may not, and then the mortgage is inside the base under § 1401(d).

3. 3

   Prepare Form TP-584 with Form TP-584.1, Schedule F

   The Department's instructions require Schedule F to be completed and attached for a mere-change conveyance. Claiming the exemption without it's not claiming it. Complete this before the closing date you've in mind, not at the counter.

4. 4

   Assemble the member disclosure if the building has up to four dwelling units

   Where an LLC is grantor or grantee of a building containing up to four family dwelling units, Form TP-584 can't be accepted for filing without documentation identifying all members, managers and other authorised persons, traced through intermediate entities until ultimate ownership by natural persons is disclosed. Assemble it in advance; it's the single most common reason a filing of this kind gets bounced.

5. 5

   If the property is in New York City, run the city analysis separately

   The city's Real Property Transfer Tax is a separate tax with its own return, its own rate schedule and its own version of the mere-change exemption at 19 RCNY § 23-05(b)(8). The Department of Finance's rules contain worked examples of the proportional calculation. Don't assume the state exemption carries the city tax with it.

6. 6

   If you rent short-term, ask your county whether it opted out of the registry

   Real Property Law § 447-c let counties opt out of the short-term rental registry by local law by 31 December 2025, and registration is filed with the county rather than the state. The county clerk can tell you which applies. Section 447-b's insurance, record-keeping and safety requirements sit alongside registration and don't depend on it.

One LLC Per Property, or One for the Portfolio?

New York has no series LLC statute, so separating properties means a separate LLC for each one.

New York's Limited Liability Company Law does not authorise series, and this is worth stating clearly because New York turns up regularly in secondary lists of states where a series LLC "can be used." We read the act's full article and section index on the Senate's own statute host and searched it: the word "series" does not appear. Article II covers formation, Article VI covers members and membership, and no article anywhere in the act creates a series of members, managers, membership interests or assets, protected or registered. Separating properties in New York means separate companies.

The per-deed cost of doing that is lower here than in most states, because the mere-change exemption travels with each conveyance so long as beneficial ownership is unchanged in each one. Moving Property A into LLC A and Property B into LLC B, with you as sole owner throughout, leaves beneficial ownership unchanged in both. Which is what the exemption is measured against. The plan that costs money is the one that rearranges ownership percentages between people at the same time as it rearranges entities, because the exemption then applies only to the unchanged share of each conveyance.

The recurring friction is paperwork rather than tax. Each conveyance is its own Form TP-584 with Schedule F, each building of up to four dwelling units triggers its own member-disclosure package, and each property inside the city gets a second return for the city's own transfer tax.

Practically, that leaves the familiar trade-off. Separate LLCs mean separate filing fees, separate annual reports, separate registered agents and separate bank accounts, every year, for as long as you hold the properties. One LLC holding several properties means one set of costs and one pool of assets exposed to a claim arising at any of them. Which side of that you land on is a function of how much equity is in the portfolio, and it is worth pricing the recurring cost before deciding, our New York LLC cost breakdown has the per-entity figures.

What Creditors Can Reach, What the New York Statute Says

The reason to hold a rental in an LLC is usually to keep a claim arising at the property from reaching everything else you own. The reverse question matters just as much and gets far less attention: if someone wins a judgment against you personally, can they reach the rental inside the LLC? That is what a state’s charging-order provision decides.

New York's LLC act contains no exclusive-remedy provision.

The relevant section is Limited Liability Company Law § 607, and it is short enough to read in full. Subdivision (a): "On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the membership interest of the member with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the membership interest. This chapter does not deprive any member of the benefit of any exemption laws applicable to his or her membership interest." Subdivision (b): "No creditor of a member shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited liability company."

Subdivision (b) is the part worth noticing, because it is an express statutory bar and a lot of state acts do not have one. It says a creditor of yours cannot go after the building the company owns. What it does not do is make the charging order the only route to your membership interest. It addresses company property, not the transferable interest, and those are different things. The section never uses the words "exclusive remedy" or "sole remedy," never mentions foreclosure, and never uses the words "single member," "sole member" or "one member." A one-owner rental company and a five-owner one are governed by the same two subdivisions.

So New York's position is neither of the two you usually read about. It is not a state that has legislated a strong exclusivity rule, and it is not a state whose act authorises a creditor to force a sale. It has a charging order, a hard bar on reaching company property, and silence on the rest. We are reporting the text; we have not characterised any New York case law applying it.

We are reporting what the section says, not what a court would do with your facts. Outcomes turn on how the LLC was capitalised, how it has been operated and what the creditor is owed, and none of that is something a page can assess. If the answer above is load-bearing for you, it is a question for a New York attorney.

Authority: N.Y. Ltd. Liab. Co. Law § 607, nysenate.gov

Three Problems No State Transfer Rule Solves

These land the same way in New York as everywhere else. One because it is federal law, two because they are contracts you signed. Which is exactly why they get left off state pages. They are also the three most likely to actually cost a landlord money, so they are here rather than buried.

The due-on-sale point is the one that generates the most bad advice. The Garn-St Germain Depository Institutions Act, at 12 U.S.C. § 1701j-3(d), bars a lender from enforcing a due-on-sale clause on nine categories of transfer of residential property of fewer than five dwelling units. The one people cite is the eighth: a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property. Neither that paragraph nor any of the other eight names a transfer to a limited liability company. The protection quoted for an LLC transfer is written for trusts, and the occupancy qualifier is the limb that matters most to a landlord, because a rental is occupied by someone else.

One honest caveat on that list. The ninth category is open-ended. It reaches any other transfer described in regulations issued under the Act, at 12 C.F.R. § 591.5(b), so it is a list that can be extended by regulation rather than a closed set fixed by the statute. We have not read those regulations end to end, and say so rather than describing the statute as more settled than we checked.

In practice lenders often do not call a loan when payments keep arriving, and that is genuinely what usually happens, but “usually not enforced” is a different thing from “not permitted,” and only one of them is a plan. The way to find out is to ask your servicer for written consent before you record, not after.

Which deed you use is a decision, not a formality. A quitclaim deed transfers whatever interest you happen to have and warrants nothing, which is why it is the cheap default for a transfer between yourself and your own company, and why title professionals warn against it. It can leave a gap in the chain of title that surfaces years later when you sell or refinance, and because it warrants nothing it gives the LLC no recourse against you if a defect turns up. A warranty deed carries the covenants across. Which one is appropriate depends on how the property was acquired and what your title history looks like, and it is a question worth asking before the deed is drafted rather than after it is recorded.

Tell your title insurer before you record. An owner’s title policy insures the person named in it. Convey the property to an LLC and the insured owner and the record owner are no longer the same. Which is the fact pattern in which coverage gets argued about at the worst possible moment, when a claim is already live. Some insurers will endorse an existing policy across to the entity, sometimes for a modest fee; some will not, and a new policy means a new premium on the current value. Either way it is a phone call before the deed rather than a discovery afterwards, and it belongs in the same budget as the tax above.

On the fourth thing people ask about: beneficial ownership reporting. Under 31 C.F.R. § 1010.380, a “reporting company” is an entity formed outside the United States and registered to do business in a State, and paragraph (c)(2)(xxiv) separately exempts any entity created by filing with a Secretary of State. A rental LLC you form in New York is therefore exempt and files no beneficial ownership report. Pages telling you to file within 30 days of formation are describing the rule as it stood before March 2025. The exception runs the other way: an LLC formed in another country and registered to do business in New York does still report. More on what compliance actually requires →

Does New York Make You Register the Rental?

Not for a long-term tenancy. New York does run a statewide registration through the County short-term rental registries established under N.Y. Real Property Law § 447-c; the New York State Department of State receives quarterly booking-service reports, under N.Y. Real Property Law art. 12-D, §§ 447-a to 447-g (L. 2024, ch. 672), but it is scoped to a category a conventional residential lease does not fall into. If you rent to a tenant on an ordinary lease, there is nothing to file with the state, and nothing that changes when the deed moves to the LLC. What follows sets out what the registration does cover, so you can check your own arrangement against it.

Nothing in New York requires a conventional long-term rental to be registered with the state. The registration regime that does exist, at Real Property Law article 12-D, is about short-term rentals and it is new: Chapter 672 of the Laws of 2024 was signed on 21 December 2024 and takes effect "on the one hundred twentieth day after it shall have become a law."

Section 447-b conditions operation on registration and adds a set of substantive duties that are easy to miss: a host must keep guest-stay records for two years, carry liability insurance of at least "$300,000 coverage for third party claims," and meet evacuation-diagram, emergency-number and fire-extinguisher requirements. Registration is not filed with a state agency. Section 447-c sends it to "the county within which such unit is located or with the multi-county registry," and requires each registry to set application and registration fees covering the "actual and necessary expenses associated with the construction, operation, and maintenance" of the registry, so the fee is county-set and there is no single statewide figure.

The catch is that coverage is not uniform. Section 447-c(1)(b) let a county opt out by adopting a local law by 31 December 2025. We did not check which of New York's counties did so (that is a sixty-two-county enquiry and it would go stale) so the honest instruction is to ask your own county clerk before assuming either way. Booking services carry a parallel duty: they must verify a host's registration before collecting fees, and file quarterly reports with the Department of State, first due 22 December 2025, with a filing fee per report under Executive Law § 96(12). That fee falls on the platform, not on you.

nysenate.gov

If You Rent Short-Term in New York

A short-term let is a different tax animal from a twelve-month tenancy, and the LLC has nothing to do with it. The lodging tax follows the stay, not the owner.

New York extended sales tax to short-term rentals recently enough that a lot of guidance predates it. Tax Law § 1105(e)(1) now expressly reaches "the rent for every occupancy of a room or rooms in a hotel or short term rental unit in this state", the words "short term rental unit" were added to a subsection that used to be about hotels. The Department of Taxation and Finance states that "[e]ffective March 1, 2025, New York State and local sales tax is imposed on sales of short-term rental unit occupancy in this state when the rental rate is more than $2.00 per unit per day."

On platforms, the duty is squarely on the booking service: "A booking service that facilitates the sale of a short-term rental unit occupancy located within New York State must register with the Tax Department as a New York State sales tax vendor, and is responsible for collecting New York State and local sales tax."

The permanent-resident line is not the same everywhere in the state, and the difference is large. The Department's rule is that a guest becomes a permanent resident after "at least 90 consecutive days without interruption", but "[i]n New York City, the local sales tax applies until a guest has stayed for at least 180 consecutive days." A two-month-plus stay in a city apartment is a different tax outcome from the same stay upstate.

A platform collecting the state tax does not always cover every local tax on the same booking, and it never covers a booking taken directly. If you take reservations off-platform as well, that is where the exposure sits.

Authority: N.Y. Tax Law § 1105(e), nysenate.gov

Who to Ask in New York

Four offices, and which ones you need depends on where the building is. The Department of Taxation and Finance owns the state transfer tax and publishes Form TP-584 and its instructions, which are also the clearest published statement of the proportional exemption and the continuing lien deduction, worth reading before you draft rather than after. If the property is in New York City, the Department of Finance administers the city's own Real Property Transfer Tax and publishes both the rate table and its Rules Relating to the Real Property Transfer Tax, which contain the worked proportional examples.

For short-term rentals, the county clerk in the county the property sits in is who holds the registry under § 447-c and who can tell you whether the county opted out, while the Department of State handles the booking-service reporting side. And your assessing unit's assessor is the office for STAR and for anything about the assessment roll.

Forming the LLC Itself

Nothing about the formation process changes because the LLC will hold rental property, the articles, the registered agent requirement and the annual filing are the same as for any other New York LLC. The walkthrough lives in the formation guide rather than being repeated here.

How to start an LLC in New York →

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