Downsizing in the Hudson Valley? Sell on Your Timeline, Keep Your Equity

Downsizing From a Family Home in Westchester, Rockland or Putnam

The typical story is a colonial in Yorktown Heights, a split-level in New City or a cape in Mahopac, bought when the children were small. The children have moved out, the stairs are harder, and a large share of the tax bill still pays for schools nobody in the house attends. Some owners move to a co-op in White Plains or a condo in Nanuet. Others choose an age-restricted community in northern Westchester or Putnam, or leave the state to be near grandchildren.

Whatever comes next, the sale itself runs on New York rules, and several of them catch long-time owners off guard. Below: what happens to your property tax exemptions, how co-ops and condos differ, what the look-back rules mean if long-term care is a possibility, which taxes apply to the sale and to your next purchase, and how to time moving out. If you are still in the early stages, our Rockland County and Putnam County pages describe how we buy in each area.

A Smaller Home Does Not Always Mean a Smaller Tax Bill

Property taxes in Westchester, Rockland and Putnam are among the highest in the country, and the school levy is usually the largest piece. Many downsizers expect the bill to fall in step with the square footage, and sometimes it does not. Assessment practice differs from one town to the next. Some assessors have not revalued in decades, so two similar houses in neighbouring towns can carry very different bills.

Co-ops and condos work differently. Under Real Property Tax Law §581, they are assessed as if they were rental buildings rather than houses, which often produces a lower assessment than a comparable single-family home. In a co-op you do not receive a tax bill at all. Your share of the building's taxes is built into the monthly maintenance. When you compare options, ask for the actual tax bill or the tax portion of the maintenance for each place you are considering, and do not rely on the listing price. Our guide to Westchester property taxes that have outgrown the house covers grievances and exemptions if you are still deciding whether to move.

STAR, Enhanced STAR and the Senior Exemption Do Not Move With You

Long-time owners often hold exemptions that took years to set up. None of them is portable.

• STAR. If you have received the Basic or Enhanced STAR exemption on your current house since before 2016, that exemption belongs to that property. The exemption program closed to new applicants in 2016, so on your next home you register with the New York State Department of Taxation and Finance for the STAR credit instead, and it arrives as a check rather than a reduction on the bill.
• Enhanced STAR. The larger benefit for homeowners 65 and older has an income limit that the state adjusts every year. On a new home you register for the Enhanced credit and the state verifies your income.
• The senior citizens' exemption. Real Property Tax Law §467 lets each town, city, county and school district decide whether to offer a reduction of up to 50% in assessed value to owners 65 and older whose income is under a limit the locality sets within a state maximum. Your new town's rules may be more or less generous than your current one. You apply to the assessor where the new home is, by that municipality's taxable status date. That is March 1 in many towns, but not all, so check.
• Veterans' exemptions also have to be applied for again at the new address.

Depending on when you close, there can be a year in which the new home carries no exemption at all. Include that year in your budget.

Where Downsizers Here Tend to Go

Co-op apartments

Southern and central Westchester has a large stock of co-ops, including in Yonkers, White Plains, New Rochelle and Hartsdale. A co-op usually costs less to buy than a house, and the monthly maintenance covers the building's taxes, its mortgage if it has one, staff and often heat. The trade-off is the board. You submit a package with tax returns, bank statements and references, attend an interview, and meet the building's financial requirements, which often include a minimum level of savings left over after the purchase. Boards can decline an applicant, some charge a flip tax on resale, and many restrict subletting. Allow several weeks, sometimes longer, from contract to approval, even if you are paying cash.

Condominiums and townhouses

With a condo you own the unit and receive your own tax bill, and you pay common charges on top. Most condo boards hold a right of first refusal rather than approving buyers, so the purchase is closer to buying a house, and you keep more freedom to rent the unit or sell it later. Condo and townhouse communities are spread through Rockland, including Nanuet and New City, and through northern Westchester and Putnam.

Age-restricted communities

The federal Housing for Older Persons Act allows a community to market itself as 55-and-over when at least 80% of its occupied homes have a resident 55 or older. These are usually condos or townhouses with a homeowners' association that handles the landscaping and exterior maintenance. Before you commit, read the age rules if an adult child or grandchild might live with you, and read the association's budget and reserve fund.

Continuing care retirement communities

New York licenses continuing care retirement communities under Article 46 of the Public Health Law. They typically charge an entrance fee plus a monthly fee, and the contracts differ in how much of the entrance fee is refunded. Many residents pay the entrance fee from the sale of their house, so your closing date has to fit the community's move-in date.

Leaving New York

If you move out of state before the closing, Form IT-2663 applies to the sale. When the house was your principal residence and the gain qualifies for the federal exclusion, you can claim an exemption from the estimated tax payment. Our page on selling when you are relocating explains how to sign remotely.

Capital Gains, Transfer Tax and the Mansion Tax

• The home-sale exclusion. Section 121 of the tax code excludes up to $250,000 of gain for a single filer and $500,000 for a married couple filing jointly, provided you owned and lived in the house for two of the last five years. A surviving spouse can generally still use the $500,000 figure if the sale takes place within two years of the spouse's death. New York follows the federal exclusion.
• Above the exclusion. After thirty years in Westchester, some gains exceed it. The excess is taxed federally as a long-term gain and by New York at its ordinary income rates. Your cost basis includes the purchase price plus capital improvements, such as a new roof, an addition or a kitchen renovation, so gather those receipts before you meet with your accountant.
• Transfer tax on your sale. The state charges the seller 0.4%. A house in Yonkers, Mount Vernon or Peekskill also pays that city's own transfer tax. When we buy, we cover the transfer taxes.
• The mansion tax on your next purchase. The 1% mansion tax applies to residential purchases of a million dollars or more and is paid by the buyer. On the house you sell it is not your cost. If the home you buy next reaches that figure, it becomes yours.

With a very large gain, some owners compare selling now with keeping the house, because heirs generally receive a stepped-up basis at death. That comparison needs a CPA and an estate attorney. We are not the right people to judge it.

If Long-Term Care Is a Possibility

For Medicaid purposes, your home is generally an exempt asset while you or your spouse live in it, up to an equity limit that changes each year. Once you sell, the proceeds are cash, and cash counts. Nursing-home Medicaid in New York looks back 60 months at any transfers made for less than fair value, so giving part of the proceeds to your children can lead to a period of ineligibility later. A look-back for home-care Medicaid was enacted in 2020, but its start has been postponed more than once, so check its current status. The state can also seek repayment from an estate for benefits it paid.

Selling the house for a fair price is not itself a penalised transfer. What matters is what happens to the money afterwards. If care may be needed in the next several years, see an elder law attorney before you sign a contract, not after the closing.

Timing the Sale and the Move

New York is an attorney state. Your lawyer drafts the contract, clears title issues, prepares the deed and the TP-584 transfer tax return, and handles the closing. The difficult part for a downsizer is sequencing, because the next home may not be ready on the day the current one sells. Three common approaches:

1. Sell first and stay on for a while. A post-closing possession agreement lets you remain in the house after the sale for an agreed period. Our page on selling now and moving out later explains how those agreements are written in New York.
2. Buy first. Bridge financing or savings cover the purchase, and the house sells afterwards. That approach suits people who can carry two properties for a while.
3. Close both on the same day. This is possible, but it depends on two sets of buyers, lenders and attorneys all being ready at once. A cash buyer with no mortgage contingency removes one of those variables.

What you leave behind

Decades of belongings are often harder to deal with than the paperwork. Let family members choose what they want first. An estate-sale company can handle furniture and collectibles, and charities will collect usable items. When you sell to us, whatever is left after you have taken what matters stays in the house, and we clear it after the closing.

What Selling to Simply Sold RE Looks Like

1. A conversation first. Tell us about the house and what you are moving to. There is no obligation.
2. One visit. We walk through once at a time that suits you. Nothing needs to be cleaned or repaired beforehand.
3. A written offer. You get a firm number you can use to plan the next purchase.
4. You set the date. Close soon, or weeks out, with time to stay on afterwards if the next home is not ready.
5. Attorneys close the deal. Your lawyer reviews everything, the proceeds are wired to you, and you take only what you want.

We are rated 4.9 from 75 Google reviews, and you can read them on our reviews page.