Form IT-2663: New York Nonresident Sellers and Installment Sales
Form IT-2663 is the estimated tax payment New York collects from nonresidents who sell New York real estate, and it is due at the county clerk when the deed is recorded. You compute your gain on the form and pay 10.90% of it (the 2026 top rate) as an estimate. If you sell on an installment basis, you pay only on the gain you will report for the year of sale, which can cut the check at closing to a fraction of the full-gain amount.
This page covers who files, how the math works, how installment sales are handled, and what happens in later years. For the general installment method, see the installment sale guide.
Go deeper: New York capital gains tax in 2026, on Big Sale Tax.
For the federal side of the same sale, the installment sale calculator shows the gain reported each year and the tax by year, with New York state tax as modeled.
Who must file Form IT-2663
From the 2026 instructions (IT-2663-I):
- Nonresident individuals, estates and trusts selling or transferring New York real property must "estimate the personal income tax liability on the gain" and pay it using IT-2663 (Tax Law §663).
- New York residents do not file it. The requirement "does not apply to individuals, estates, or trusts who are residents of New York State at the time of the sale or transfer."
- The 2026 form covers conveyances after December 31, 2025 and before January 1, 2027. Each year has its own form.
- Married nonresidents may file one IT-2663 and pay with one check. Other co-owners each file their own.
- Co-op shares use Form IT-2664 instead.
- Revocable living trusts and other grantor trusts check the individual box.
The recording officer will not record the deed unless each nonresident seller either certifies an exemption on Form TP-584, Schedule D, or presents IT-2663 with full payment. In New York City, Form TP-584-NYC replaces TP-584.
Exemptions
No IT-2663 payment is due when:
- The property qualifies in total as your principal residence under IRC §121. If it was only partly your residence (a two-family you lived in half of, a home with a rented unit), you pay on the gain allocated to the non-residence part, using the same allocation you use federally.
- You are conveying mortgaged property to the lender in foreclosure or in lieu of foreclosure with no other consideration.
- The buyer or seller is a federal or New York agency, Fannie Mae, Freddie Mac, Ginnie Mae or a private mortgage insurer.
- No gain is recognized under the Code, for example a §1031 like-kind exchange. You check box 4B and describe the exchange.
- The sale produces a loss (box 4A).
Even when no payment is due, you may still have to file a New York nonresident return (IT-203) to report the sale.
How the IT-2663 math works
The Worksheet for Part 2 on page 2 of the form:
| Line | What goes there |
|---|---|
| 15 | Sale price less selling expenses |
| 16 | Cost or adjusted basis (purchase price plus improvements, less depreciation) |
| 17 | Total gain or loss (line 15 minus line 16) |
| 18 | The gain from line 17 that will be reported on your federal return for 2026 |
| 19 | 10.90% (0.1090), the highest New York rate for 2026 under Tax Law §601 |
| 20 | Estimated tax due: line 18 times line 19, rounded |
Line 20 goes to the front of the form and to voucher IT-2663-V, which stays attached. The payment is a separate check or money order to "NYS Income Tax."
How installment sales are handled on IT-2663
This is the part most sellers miss. The instructions say: "You are required to compute the total gain, if any, on the sale of the real property. However, you pay estimated personal income tax only on that portion of the gain that will be reported on your 2026 federal income tax return."
In practice:
- Answer Item B "Yes" if you report the sale on federal Form 6252, and give the length of the installment agreement.
- Line 17 still shows the full gain.
- Line 18 shows only the gain you will report federally for the year of sale: the gain in the down payment and any other principal received that year, plus any depreciation recapture that §453(i) requires you to report up front.
- For payments in later years, the instructions direct you to regular estimated payments on Form IT-2105 (individuals) or IT-2106 (fiduciaries).
Estates and trusts are different: they estimate tax on the entire gain without regard to distributions.
Simple example: cash sale vs installment sale
Simple example. A Florida resident sells a New York rental building for $1,200,000. Adjusted basis is $500,000 and selling expenses are $72,000, so the total gain is $628,000. There is no mortgage on the property, so the contract price equals the sale price. To keep it simple we ignore depreciation recapture. On the installment version, the buyer puts 20% down ($240,000) and pays the $960,000 balance over 10 years in equal principal payments.
| Cash sale | Installment sale | |
|---|---|---|
| Line 17, total gain | $628,000 | $628,000 |
| Gross profit percentage | n/a | 52.33% ($628,000 / $1,200,000) |
| Line 18, gain reported for 2026 | $628,000 | $125,600 ($240,000 x 52.33%) |
| Line 20, IT-2663 payment at closing | $68,452 | $13,690 |
| Later years | None | About $50,240 of gain a year, paid through IT-2105 estimates (about $5,476 a year at the 10.90% estimate rate) |
How the gross profit percentage is built is in gross profit percentage and Form 6252 instructions. If the rental has depreciation that must be recaptured as ordinary income under §453(i), that amount also goes on line 18 in the year of sale.
IT-2663 is an estimate, not the tax
The 10.90% rate is deliberately high. Your real New York tax is figured on your nonresident return, Form IT-203, where New York computes tax as if you were a resident and then applies the share of your federal income that comes from New York sources. For 2025, joint filers paid 6.85% up to $2,155,350 of taxable income, 9.65% to $5,000,000 and 10.3% to $25,000,000 before the 10.9% top rate. Many sellers pay less than the IT-2663 estimate and get the excess back when they file. The instructions are clear that IT-2663 payments "cannot be refunded prior to the filing of an income tax return," so the only way to recover an overpayment is to file.
Gain on New York real property stays New York-source income every year you receive it, no matter where you live. That is the same principle California applies; see installment sale California.
If you are a New York resident who moves away
IT-2663 only applies if you are a nonresident when you sell. If you sell while a New York resident and move later, a different rule applies. Tax Law §639(a) says an individual who changes from resident to nonresident must "accrue to the period of residence any items of income, gain, loss, deduction ... accruing prior to the change of status." The IT-203 instructions spell out that this "includes income or gain you elected to report on the installment basis."
Two limits:
- The accrual applies to non-New York-source items. New York real estate gain is New York-source anyway, so it keeps being taxed as you are paid. The accrual bites on things like an installment sale of stock or out-of-state property while you lived in New York.
- Under §639(d) the accrual is not required "if the individual files with the commissioner a bond or other security acceptable to the commissioner," on condition the income is reported in later years as if you had stayed a resident.
Moving-state issues for all states are covered in installment sale state taxes.
Practical checklist before closing
- Confirm residency on the closing date. Residency, not the property, decides whether IT-2663 applies.
- Get your adjusted basis and depreciation history from your CPA before the closing statement is final.
- Decide installment vs cash sale before closing, since line 18 depends on it.
- Bring IT-2663 and a separate check (or have the title company handle it) so recording is not delayed.
- Calendar IT-2105 estimated payments for the following years.
- File IT-203 to recover any overpayment.
Model the payment schedule with the installment sale calculator. For how a New York rental sale fits into a broader exit plan with passive losses, see The Waterfall Strategy. For the federal side of selling real estate on installments, see installment sale real estate.
Bottom line
Nonresidents selling New York real estate pay a 10.90% estimate on the gain when the deed is recorded. An installment sale shrinks that payment to the gain you actually report for the year of sale, with later years handled through ordinary estimated payments. The IT-2663 amount is only an estimate; file IT-203 to settle the real tax and recover any excess.
Questions to ask your CPA
- Am I a New York nonresident on the closing date for tax purposes?
- What is my adjusted basis, and how much depreciation recapture must go on line 18 in year one?
- Should I report the sale on the installment method federally and in New York?
- What estimated payments on IT-2105 will I owe in each later year?
- Will my actual New York tax be lower than the IT-2663 estimate, and when can I get the difference back?
Installment sale + 1031 + ILIT: when is it a slam dunk?
For a large estate, a 1031 exchange, an installment sale and a trust-owned life insurance policy (an ILIT) can work together. It tends to win when most of these are true (2026 figures: the federal estate tax exemption is $15,000,000 per person, $30,000,000 for a married couple):
- Your estate is clearly over the line: a projected estate tax bill of $10,000,000 or more.
- You are married, age 50 to 60, in preferred health or better. At 75 or older, single, or in a rated health class it usually does not win.
- One separate property has stuck (suspended) passive losses at least as big as its gain.
- That property earns little: low cap rate, slow growth.
- You would sell or borrow anyway, or you do not have the cash on hand to pay the premiums.
Four or five true? Run the numbers. Enter your own estate and ages in the estate tax strategy calculator on Big Sale Tax. Estimates from published rates, not a quote or advice; your CPA and attorney decide.
Primary sources
- New York Form IT-2663, Nonresident Real Property Estimated Income Tax Payment (tax.ny.gov, PDF)
- New York Instructions for Form IT-2663 (tax.ny.gov, PDF)
- IRS Publication 537, Installment Sales
Authority pages checked October 18, 2026.
Run your own numbers. Compare a cash sale, seller financing and a structured installment sale side by side, free.
Educational only, not tax, legal or investment advice. Examples are illustrative. Have your CPA or tax attorney review your facts before you act. Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service, and a licensed insurance agent (CA Insurance License #4273294). He is not a CPA or attorney. He is paid a commission only if a structured installment sale is funded; seller financing pays him nothing. Disclosures.