Are you thinking about selling an investment property in Jamaica Estates so you can reinvest in Bergen County? You are not alone. Many Queens owners are using a 1031 exchange to move capital closer to New Jersey suburbs while deferring federal taxes. In this guide, you will learn how the rules work, which New York and New Jersey costs still apply, and the practical steps to keep your exchange on track. Let’s dive in.
1031 basics for Jamaica Estates owners
A 1031 exchange lets you sell real property held for investment or business and reinvest into other like‑kind U.S. real property, with federal capital gains deferred if you follow strict rules. The IRS explains that you must identify replacement property within 45 days and complete your purchase within 180 days of the sale or your return due date, whichever comes first. You also file Form 8824 for the year of the exchange. See the official overview in IRS Publication 544.
What qualifies as like‑kind
After 2017, only real property held for investment or business qualifies. Most U.S. real property is like‑kind to other U.S. real property. A primary residence does not qualify unless specific conversion requirements are met. Details are outlined in IRS Publication 544.
The 45‑day and 180‑day clocks
You must identify potential replacement properties in writing within 45 days. You must acquire your replacement no later than 180 days after the sale or your return due date with extensions, whichever is earlier. Missing either deadline usually ends deferral. The timing rules are summarized in IRS Publication 544.
The role of a Qualified Intermediary
In a standard deferred exchange, you cannot touch the sale proceeds. An independent Qualified Intermediary (QI) holds funds and coordinates the purchase to avoid constructive receipt. Learn the basics of QIs and exchange mechanics in this Investopedia overview.
NYC and NYS costs you still plan for
A 1031 exchange defers federal income tax, but it does not eliminate New York City or New York State transfer taxes. These are paid at closing when you transfer title.
NYC Real Property Transfer Tax (RPTT)
For residential one‑to‑three family homes and condos, the rate is 1 percent if the price is at or below $500,000, and 1.425 percent if above $500,000. Other property types use different rates. See the full details from the NYC Department of Finance.
NYS Real Estate Transfer Tax and additional state tax
New York State imposes 0.4 percent (2 dollars per 500 dollars) statewide. There is also an additional 1 percent state tax on residential conveyances with consideration of 1,000,000 dollars or more. Closings use Form TP‑584. See the instructions hosted here: TP‑584 instructions.
Nonresident estimated tax (Form IT‑2663)
If you are a New York nonresident selling NY property, the state generally requires an estimated tax payment at closing using Form IT‑2663. The calculation uses the highest New York personal income tax rate for the year, and the form has been updated to reflect a top rate of 10.90 percent in recent years. See the state’s bulletin on the update to the form and rate in this NYS guidance.
Buying in Bergen County: NJ fees and forms
When your replacement property is in New Jersey, you will handle the state’s recording fees and any required tax prepayments at deed recording.
New Jersey Realty Transfer Fee (RTF)
New Jersey charges a graduated Realty Transfer Fee at recording. The exact fee depends on the price and is listed in the state’s tables. Review the state’s page on the Realty Transfer Fee for current brackets and forms.
NJ nonresident prepayment and GIT/REP forms
Nonresident sellers of NJ property must complete GIT/REP forms and usually prepay estimated Gross Income Tax. The estimate is computed as gain times the highest NJ rate for the year, with a minimum equal to 2 percent of the total sale price. The state reconciles the prepayment on your return. See the NJ GIT/REP FAQs for details.
Structuring your exchange across state lines
How you structure the transaction affects timing and transfer taxes.
Direct deeding to limit extra transfers
Most exchanges use direct deeds so the buyer receives title from you and you receive title directly from the replacement seller. This approach helps avoid extra recordable transfers that can add transfer taxes. A discussion of practical transfer‑tax planning is available here: like‑kind exchanges and transfer‑tax considerations.
Reverse or improvement exchange options
If you must buy first or need to complete improvements before taking title, an Exchange Accommodation Titleholder can temporarily hold title. The IRS safe harbor for these parking arrangements is in Revenue Procedure 2000‑37. See an overview of the safe harbor in this summary of Rev. Proc. 2000‑37.
Plan cash at closing
Even with a perfect 1031, you still need funds for NYC and NYS transfer taxes, New Jersey fees, title charges, and any withholding or prepayments. Coordinate who pays what and when, and confirm how refunds or credits will be handled after you file returns. Review NYC’s RPTT details here: NYC transfer tax guidance.
A simple step‑by‑step plan
- Confirm use and eligibility. Make sure your Queens property is held for investment or business use. Review the federal rules in IRS Publication 544.
- Assemble your team early. Engage a QI, an NY and NJ real estate attorney, and a CPA who handles multi‑state 1031 work. This Kiplinger guide outlines expert tips and why timing matters.
- Engage the QI before you sign. Your sale and purchase contracts must be assignable to the QI, and the exchange agreement must be in place before closing. Learn how QIs hold funds in this Investopedia overview.
- Set your timeline. The 45‑day identification and 180‑day acquisition clocks are strict. Block key dates on your calendar and prepare back‑up properties.
- Price and list the Queens property. Plan for NYC RPTT and NYS RETT at closing, and check whether IT‑2663 applies based on your residency.
- Source Bergen County replacements. Confirm NJ Realty Transfer Fee numbers and any GIT/REP obligations early with your attorney and title company. Use state guidance for RTF and GIT/REP.
- Close seamlessly. Follow direct deeding where possible, avoid touching proceeds, and confirm wire instructions and filings. If you are using a reverse or improvement exchange, follow the Rev. Proc. 2000‑37 safe harbor.
- File after closing. Include Form 8824 with your federal return and reconcile any NY or NJ prepayments or withholdings on your state returns.
Common pitfalls to avoid
- Missing the 45‑day or 180‑day deadlines. These are hard deadlines under IRS Publication 544.
- Taking control of sale proceeds. Funds must stay with the QI to avoid constructive receipt.
- Overlooking NYC, NYS, or NJ transfer taxes. A 1031 does not erase these costs. See NYC RPTT guidance and NJ’s Realty Transfer Fee page.
- Ignoring state withholding rules. Review NY IT‑2663 requirements and NJ GIT/REP minimums early.
- Foreign seller surprises. FIRPTA can require 15 percent withholding by the buyer. See the IRS page on FIRPTA withholding.
Work with a local, bi‑state guide
Crossing from Queens to Bergen County adds moving parts. You need a plan that protects your timeline, paperwork, and cash flow. If you want experienced help coordinating agents, attorneys, title, and your QI while you focus on the right replacement, connect with Crystal Burns.
FAQs
Do NYC and NYS transfer taxes still apply in a 1031 exchange?
- Yes. A 1031 defers federal gain but NYC’s RPTT and NYS transfer taxes are generally due at closing on the conveyance of title. See the NYC RPTT page.
What deadlines control a 1031 exchange for Jamaica Estates property?
- You must identify replacement property within 45 days and acquire it within 180 days or by your return due date, whichever is earlier. See IRS Publication 544.
As a New York resident, do I owe IT‑2663 withholding when I sell in Queens?
- Typically no. IT‑2663 is for nonresident sellers. Residency should be confirmed with your tax advisor. See the state bulletin on the form and rate update here.
What New Jersey costs should I expect when buying in Bergen County?
- Expect the state’s Realty Transfer Fee at recording and, if selling NJ property as a nonresident, GIT/REP estimated tax with a 2 percent minimum of the sale price. See the RTF overview and GIT/REP FAQs.
Can I buy the NJ replacement property before selling my Queens property?
- Yes, through a reverse exchange that uses an Exchange Accommodation Titleholder under the Rev. Proc. 2000‑37 safe harbor. These are more complex and still follow 45‑ and 180‑day timing.
How do QIs fit into a 1031 exchange from Queens to Bergen County?
- A Qualified Intermediary holds your sale proceeds and coordinates the replacement purchase so you do not receive the funds. See this overview of QI roles from Investopedia.
