Quick answer: New York State taxes the gain as ordinary income, up to 10.9%. Add New York City's own city income tax for city residents, and the combined bill can reach nearly 14.8%. See the full cost picture in the New York probate real estate sale calculator.
No discount for holding it longer
NYC adds its own income tax on top
New York City residents — not commuters who merely work there — pay an additional city income tax of 3.078% to 3.876% on the same gain. Combined with the state's 10.9% top bracket, that's a marginal rate near 14.8%, among the highest combined state-and-local rates anywhere in the country.
The stepped-up basis still helps
Regardless of the rate structure, the house's basis resets to its fair market value on the date of death for federal purposes, and New York follows that same starting point — so only appreciation after death is taxable at either level, keeping the gain small on a prompt sale.
A separate estate tax question, at the estate level
New York has its own state estate tax with a distinctive "cliff" structure — a separate concern from the capital gains tax on this sale, since it applies based on the decedent's total assets rather than the transaction itself.
A local probate attorney can review your estate — many offer a free consultation.
The state brackets apply the same way statewide; the city tax layer applies only inside New York City's five boroughs, not in Westchester, Nassau, or elsewhere upstate.