Mortgage tax, also known as mortgage recording tax, is a fee imposed by the government on the recording of a mortgage for real property it is different from real estate transfer tax. In New York State, mortgage tax rates vary by county, and the borrower typically pays the tax when the mortgage is recorded. This article will provide an overview of mortgage tax rates in New York and offer some insights to help you better understand how it works.
In New York, the mortgage tax rate is determined by the county where the property is located. The rate can range from 0.10% to 2.80% of the mortgage amount. The rates are divided into two parts:
Basic Tax: This portion of the tax is levied by New York State and is typically 0.50% of the mortgage amount for most counties. However, some counties may have a higher basic tax rate.
Special Additional Tax: This portion of the tax is levied by local governments, such as cities, towns, and villages. The rate varies by county, ranging from 0.15% to 1.30%.
For example, in New York City (NYC), which includes the five boroughs of Manhattan, Brooklyn, Queens, The Bronx, and Staten Island, the mortgage tax rates are as follows:
Basic Tax: 0.50%
Special Additional Tax: 1.30%
Total Mortgage Tax Rate: 1.80%
Remember that these rates are subject to change, and it's essential to verify the current mortgage tax rates with your local county clerk's office or a real estate professional.
In some cases, borrowers may be eligible for exemptions or reductions in mortgage tax. One common exemption is for mortgages provided by certain government agencies, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Additionally, first-time homebuyers may be eligible for a mortgage tax reduction under specific programs or incentives. It's essential to consult with a tax professional or mortgage lender to determine if you qualify for any exemptions or reductions.
The mortgage tax is typically paid at closing by the borrower. The lender, title company, or attorney handling the closing will calculate the total mortgage tax amount based on the mortgage amount and the applicable tax rate. This amount will be added to the borrower's closing costs and must be paid before the mortgage can be recorded.
Understanding mortgage tax in New York is crucial for anyone looking to purchase a property in the state. Mortgage tax rates vary by county, and it's essential to know the rates that apply to your purchasing property. Additionally, some exemptions or reductions may be available to certain borrowers. Always consult with a tax professional or mortgage lender to ensure you are well-informed about your mortgage tax obligations.
