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NYC transfer tax rates

New York City and its local counties impose transfer taxes on the sale of residential real property. These transfer tax NYC taxes are levied on both the sales price and the rental value of a property when it is sold or transferred. In addition, NYC also imposes an additional transfer tax NYC called the Mansion Tax that applies to residential properties with sales prices above $1 million. These transfer tax NYC taxes are typically paid by the seller, and they are one of the top closing costs to consider when selling a property in NYC.

In April 2019, the transfer tax NYC was amended and restructured to include 8 individual, progressive tax brackets. The new tax rates range from 1% on all sales above $2 million to 3.9% for sales of $25 million or more. The City expects this new Mansion Tax to raise between $1-2 billion annually.

The City also imposes a transfer tax NYC of between 1% and 1.425% on the sales of condos, co-ops, and 1-3 family houses. This is in addition to the NYS transfer tax of 0.4% for properties that are sold under $3 million and 0.65% on those that are sold above that threshold.

These transfer tax NYC and NYS transfer taxes are payable by the seller, and they are usually the second largest closing cost to be incurred after broker commissions. Since these taxes are not deductible as capital gains taxes, sellers should be sure to factor them into their expected net proceeds when negotiating the purchase or sale of a property.

Generally speaking, most buyers will come with a buyer agent who is responsible for paying the buyers’ transfer tax NYC. However, this is not always the case, and in some cases, buyers may be prepared to pay these taxes out of their own pocket. In these cases, it is a good idea for brokers to negotiate the transfer tax NYC liability with their clients and to make this an item of discussion in their negotiations.

If you need help calculating your transfer tax NYC, you can use a Closing Cost Calculator. This tool will automatically calculate the transfer tax NYC and NYS transfer taxes for your specific property, based on its location and purchase price. It is free to use, and it will give you a comprehensive breakdown of your estimated selling costs. The calculator will also generate an amortized schedule of the transfer tax NYC amounts due for you to use in your tax returns.  

Understanding NYC transfer taxes

Anyone selling a property in New York will likely have to pay state and local transfer tax NYC as part of their closing costs. This is often one of the largest expenses for both sellers and buyers. The good news is that there are ways to reduce this burden and save money on your closing costs.

Understanding transfer tax NYC is important to know if you are planning on selling a co-op or condo. These taxes are levied on virtually every real estate transaction, and they are not always clearly explained by the listing broker. Transfer taxes are a type of tax charged by the city and the state that is imposed on the sale of real estate (houses, apartments, and condos). They are collected by the city at closing and then passed onto local governments to help fund services.

The NY State transfer tax NYC is 0.4% for properties that sell for less than $3 million and then jumps to 0.65% when the sales price goes above this mark. On top of that, the city charges its own transfer tax NYC that is between 1% and 1.425% depending on the property's value. This is known as the Real Property Transfer Tax or RPTT and it was first introduced in 1959.

It is also worth noting that the transfer tax NYC only applies to the five boroughs, so if you are selling a house in Westchester County, it would not be subject to this tax. However, even though the transfer tax NYC only applies to the city, it can be quite large as it is charged on all residential real property transactions.

In the vast majority of real estate transactions, the seller pays the transfer tax NYC. The only exception to this rule is when the property is a sponsor sale in a brand-new development where the buyer will typically agree to pay the tax as part of the negotiations.

However, it is important to note that in some places, it is more common for the buyer to be responsible for paying the transfer tax NYC. This is typically a decision that is made as part of the negotiations between the two parties and is based on both local custom and market conditions.

The City of New York is a big money maker for its transfer tax NYC as they are estimated to bring in over $1 billion this year alone. As a result, the City can be somewhat aggressive in pursuing collection of this tax. For example, they recently sent transfer tax NYC bills to thousands of property owners who had already paid their taxes.

In the end, it is important to understand that transfer tax NYC are not as easy to avoid as other closing costs such as title insurance and attorney fees. The best way to deal with these fees is to work with a reputable broker who can provide you with commission rebates to offset some or all of the transfer tax NYC that you will be required to pay at closing. 

Transfer tax exemptions NYC

If you’re selling a property in New York City or even just transferring ownership in one of the many corporations that own properties here, you have to pay a transfer tax NYC. This is a significant cost and, depending on the sale price of the property, it can be more than you expect. The good news is that there are some exceptions that can save you some money. This article takes a look at the NYS and transfer tax NYC, who pays them, and how they come about.

What Is a Real Property Transfer Tax?

The Real Property Transfer Tax (RPTT) is a municipal tax that is paid whenever there is a change of ownership in any type of real property in New York City. This includes the sale of a single-family house, two-family house, three-family house, or multiple-dwelling unit in a co-op apartment building. It also applies to the sale of a condominium unit in a building or of shares of stock in a cooperative housing corporation.

RPTT is levied at a rate of 1% of the sales price of the property. This is significantly less than the 4% or so that you might expect for a typical real estate transaction in the city. The transfer tax NYC is in addition to the 1% New York State mansion tax that applies when a property sells for over $3 million.

Who Must Pay the Transfer tax NYC?

The responsibility for paying the state and city transfer tax NYC typically lies with the seller unless it is explicitly stated otherwise in a binding contract between the parties. If the seller does not pay the transfer tax NYC, the obligation then becomes the responsibility of the buyer. This is especially true in sponsor units in new developments where the responsibility for paying these fees may be negotiated as part of the deal.

There are a few exceptions to this rule, but the most common are when the seller is exempt from paying the transfer tax NYC. For example, if the property is owned by either the federal government or a foreign country that uses it for diplomatic and consular purposes, then it will be exempt from paying RPTT. In some cases, this can save you up to $1,700 in transfer tax NYC.

If the property is not exempt, then the RPTT will be based on a formula that takes into account the size of the sale and the location of the property. For example, a 1-4 family house in Brooklyn will have a lower transfer tax NYC than a penthouse in Manhattan.

If you are selling a property in NYC, make sure that you understand the RPTT and how it affects your closing costs. Then, if you are in a position to avoid paying the RPTT altogether, do so! You might find that the tax savings can help you pay for some of the other closing costs associated with your sale. This will make your closing a little bit easier and help you get to the finish line with some cash left over. 

Sishodia PLLC

Sishodia PLLC | Real Estate Attorney and Estate Planning Lawyer | Asset Protection Law Firm | 1031 Exchange - NYC

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