Short-Term Rental Taxes in New York: The Hamptons, Catskills, and NYC Rules
Like California, New York does not conform to federal bonus depreciation. You must add back the excess bonus depreciation on your NY return in year one, then recover it over subsequent years. The federal benefit is fully preserved; the NY state benefit is deferred.
New York is home to some of the most valuable and sought-after STR markets in the Northeast: the Hamptons (one of the highest ADR markets in the country), the Catskills (resurgent mountain market driven by NYC weekend escape demand), the Hudson Valley, and the Finger Lakes wine country. Despite New York's high income tax rates and non-conformity with bonus depreciation, these markets can generate exceptional returns for well-positioned STR investors.
New York State Income Tax Rates
| Filing Status / Income | NY State Rate |
|---|---|
| Single, $0–$17,150 | 4% |
| Single, $17,150–$23,600 | 4.5% |
| Single, $23,600–$27,900 | 5.25% |
| Single, $27,900–$161,550 | 5.85% |
| Single, $161,550–$323,200 | 6.25% |
| Single, $323,200–$2,155,350 | 6.85% |
| Single, $2,155,350–$5M | 9.65% |
| Single, $5M–$25M | 10.3% |
| Single, over $25M | 10.9% |
New York Bonus Depreciation Addback
New York requires taxpayers to add back the difference between federal bonus depreciation and what regular MACRS depreciation would have been. If you take $120,000 in federal bonus depreciation and regular MACRS would have been $24,000, you add back $96,000 on your NY return. Over subsequent years, you can recover this $96,000 — typically 1/5 per year — as a NY deduction.
The practical impact: you lose the timing advantage of bonus depreciation at the New York state level, but you don't permanently lose the deduction. Total lifetime New York depreciation equals total federal depreciation — it's just spread over more years.
Top New York STR Markets
The Hamptons (Suffolk County): The highest ADR STR market in the Northeast, with peak summer weekly rates of $5,000–$50,000+ for premium properties. Very high property values (many properties $3M–$20M) mean cost segregation studies generate exceptional absolute dollar amounts. Suffolk County hotel tax applies.
Catskills (Delaware, Sullivan, Ulster Counties): The NYC weekend escape market has exploded since 2020. Properties in towns like Woodstock, Hudson, and Livingston Manor have seen significant appreciation. More accessible entry prices than the Hamptons with strong yield-to-price ratios.
Hudson Valley (Dutchess, Orange Counties): Year-round tourism driven by historic estates, vineyards, and arts culture. Properties in Rhinebeck, Millbrook, and the Hudson area command premium rates from NYC travelers.
NYC Short-Term Rental Rules
New York City has among the most restrictive STR regulations in the country. Local Law 18 (effective September 2023) effectively bans most STRs in NYC — hosts must register, be present during stays, and can host a maximum of 2 guests at once. This has essentially eliminated Airbnb-style non-hosted rentals in the five boroughs. Investors targeting NYC STR income should be aware that NYC is functionally closed to traditional STR operation.
Navigate NY STR Taxes with Confidence
Even with NY's complexity, cost segregation generates significant federal savings. Get your free estimate for your Hamptons or Catskills property.
Get My Free Estimate