A corporation, partnership or other business entity conveying its interest in whole or in part in real property for consideration will, as a general rule, be subject to transfer tax. However, a transfer or acquisition of a controlling interest in a corporation or partnership having an interest in real property can also create transfer tax consequences.

A transfer or acquisition of a total of 50% or more of the voting stock, capital, profits or beneficial interests of a corporation or 50% or more of the capital, profits or beneficial interest of a partnership, trust or other entity are deemed controlling interests. NYC adds to this definition, 50% or more of the total fair market value of all classes of stock. NYS adds to this definition 50% or more of the capital, profits or beneficial interest in the voting stock of the corporation. No tax will be due if the entity whose interest is being acquired does not itself own at least a 50% interest in NY real property.

The types of interests subject to taxation include a fee, leasehold, a beneficial interest, an encumbrance, development rights, air rights, options to purchase, contracts of sale, and rights to use or occupy real property or to receive income, profits or rents from real property. Not subject to taxation are rights of first refusal to purchase real property and ownership of notes or other receivables secured by real property.