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Real Estate Transfer Taxes In New York

June 16, 2023George Barrett

Real estate transfer taxes are integral to the real estate transaction process and vary significantly from state to state. In New York, these taxes may be imposed by both the State government as well as local municipalities in some cases. Anyone involved in real estate transactions should first gain insight into all aspects of real estate transfer taxes in New York.

This article intends to explain how such taxation works and provide a deeper understanding of its implications for those involved in real estate transactions within New York.

What Are The Real Estate Transfer Taxes For New York City And New York State?

The real estate transfer tax rate in New York City is 1.425%. This amount must be paid upon the closing of a sale or purchase of property and applies to residential and commercial properties. The NYC Real Property Transfer Tax is split evenly between the buyer and seller; however, if the property is being sold for less than $500,000, then the entire amount of tax can be paid by one party to close the deal.

At the state level, two separate taxes must be considered: a State Transfer Tax and a Mortgage Recording Tax. The State Transfer Tax currently stands at 0.4% of the transaction value, and this fee must be paid by either the buyer or seller. The Mortgage Recording Tax is generally applicable when financing is involved in the purchase of property; it is calculated based on loan size with rates ranging from 0.25%-1.75%, depending on the jurisdiction within New York State. Both taxes are collected by county governments throughout New York State at closing time.

Who Pays The Real Estate Transfer Tax In New York?

The real estate transfer tax in New York is split evenly between buyers and sellers. However, if the sale price is less than $500,000, one party may pay all of the taxes associated with the transfer to complete the transaction. This can benefit those looking to purchase or sell a home without worrying about paying two separate amounts at closing time.

Exemptions From Paying New York Property Transfer Tax

In New York, certain individuals are exempt from paying property transfer taxes. This includes:

  • veterans and their surviving spouses who were honorably discharged or retired from the US Armed Forces
  • first-time homebuyers purchasing a single-family residence for $500,000 or less 
  • transfers of real estate between close relatives, such as parents and children

It is important to note that these exemptions do not apply to all transactions in New York State; some counties and cities may have different rules related to who can receive an exemption on their property transfer taxes.

Which Property Transfers Are Exempt From The Tax?

The types of property transfers exempt from New York's real estate transfer tax depend on the location. In general, certain transactions, such as those involving inheritances and government entities, may be exempted in most counties and cities. Additionally, some locations also provide exemptions for transfers between family members, charitable organizations, religious institutions, or educational facilities.

Understanding Real Estate Transfer Taxes In NY

Real estate transfer taxes in New York are a necessary part of the real estate transaction process. It is important to know these rates and regulations so that buyers can accurately calculate their closing costs and sellers can understand what they will net from the sale. Knowing how much money is involved before making any real estate purchase or sale decisions can help ensure everyone gets a fair deal. 

By understanding how New York's transfer tax works, individuals can ensure they have accurate information when dealing with this type of financial transaction.

George is the visionary behind NY Real Estate Trend. With over 20 years of experience in the real estate industry, he has a deep understanding of the New York market and a passion for helping others navigate it.
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