Combined rate and how to defer it in New York.
New York's top state income tax rate of 10.90% on capital gains produces a combined investment property figure of 34.7% (20% federal + 3.8% NIIT + 10.90% state). New York City residents add a city income tax on top, which can push the effective rate above 40%.
New York taxes capital gains as ordinary income at up to 10.90% at the state level. New York City residents face additional city income tax, increasing the effective rate further. See the state-plus-federal estimate with depreciation recapture in the capital gains tax calculator.
A 1031 like-kind exchange defers the combined 34.7% state-plus-federal rate, and city taxes for NYC residents, by reinvesting all proceeds into a replacement property. Model the numbers in the 1031 exchange calculator and get your deadline dates from the timeline calculator.