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NYC transfer tax implications

Transfer tax NYC implications are among the largest closing costs you’ll have to pay when selling a property in New York City. The combination of the transfer tax NYC and NY state transfer taxes can cost anywhere between 1.4% and 2.075% of your sale price. This can add up quickly and can be one of the biggest hurdles for sellers to overcome during a real estate transaction.

NYC’s transfer tax (also known as the Real Property Transfer Tax, RPTT) is a municipal fee that applies to all conveyances of residential properties in the city. It was first introduced in 1959 and has since been modified several times. It is currently set at 1% of the sales price for any residential real property in NYC valued at more than $25,000, including townhouses, condos, and co-ops. In addition to the transfer tax NYC, a statewide transfer tax applies for transactions outside of the city limits.

Both the transfer tax NYC and statewide transfer taxes are paid when you sell any property that’s been recorded in the city or the state’s records. The fee is payable to your county clerk and can be paid in cash or by certified check.

The good news is that there are some exemptions from both the transfer tax NYC and statewide transfer taxes. However, these exceptions are few and far between. If you’re unsure whether or not you’ll be subject to these fees, it’s best to consult with a knowledgeable NY property attorney who can help you determine what your exact transfer tax NYC burden will be.

Who pays transfer taxes in NYC?

Generally speaking, in NYC the seller covers the transfer tax NYC as a part of your closing costs. There are some exceptions to this, such as with sponsor units in new development properties where the developer may agree to cover the transfer tax NYC as a point of negotiation with a buyer. This can have a big impact on buyers in the city and is something that should be discussed and negotiated between both parties in advance of the final sale.

What are the ways to avoid transfer taxes in NYC?

In most cases, it’s impossible to avoid paying transfer taxes when you sell a property. Unless you’re the government or a non-profit, there are very few exemptions from these fees. One way to reduce your transfer tax NYC bill is through an agreement called a purchase CEMA or “splitter.” A purchase CEMA allows the buyer to assume and consolidate your outstanding mortgage with their new loan, which can significantly reduce your overall transfer tax NYC liability.

Regardless of whether you’re buying or selling, understanding the transfer tax NYC implications can be tricky, especially when combined with the statewide NY transfer tax. By working with a reputable NYC property attorney, you can be better prepared to navigate these sometimes confusing real estate closing costs and make your property sale a success.  

NYC transfer tax laws

When a person or entity sells real property in New York City, there are numerous fees and taxes involved. A common one is the transfer tax NYC, which can be significant and must be paid at closing. This article will discuss the ins and outs of this fee and what it is used for.

The NYC Real Estate Transfer Tax (“RPTT”) is a tax charged whenever a conveyance of real property or shares in a cooperative housing corporation occurs. This can include a sale of a condominium unit, a townhome, or an apartment building. The RPTT can also be applied to the sale of a partnership interest, stock in a corporation, or an interest in a trust or unincorporated association. The tax is based on the fair market value of the real property or interest transferred.

If the consideration of the transfer is equal to or less than $500, then no transfer tax NYC is imposed. However, if the consideration is $500 or more, then the buyer must pay an amount equal to the RPTT multiplied by the number of units sold or shares in the cooperative corporation transferred. This is the “regular” transfer tax NYC. There is also an additional 1% “mansion” transfer tax NYC that must be paid on properties sold for over $3 million.

In the vast majority of NYC residential sales, the seller covers these fees and pays them at closing. The only exception would be a sponsor sale of a new development, but in this case, it is usually negotiated to be paid by the developer as part of the deal.

Transfer tax NYC is a significant revenue generator for the City and helps to offset the cost of many other services the City provides, such as police and fire protection. If you are thinking of selling a property, you should consult with a real estate attorney to ensure that you are aware of all the fees and taxes that may be associated with the sale. This will help you avoid surprises at closing and ensure that you get the best possible price for your property. 

NYC transfer tax thresholds

When it comes to real estate transactions, the cost of transfer tax NYC is often one of the biggest expenses that sellers face. These are typically paid in addition to the seller’s own real estate agent commissions. But the good news is that there are ways to minimize these expenses, especially for NYC sellers.

In New York City, the Real Property Transfer Tax (RPTT) is a tax that must be paid when property changes hands between two parties. It’s similar to a property tax in that it is based on the value of the property at the time of its sale. The RPTT rates currently run from 1% for residential properties valued at $499,999 or less to 1.425% for residential properties valued at more than $3,000,000.

For those looking to avoid paying this transfer tax NYC, there are a few exceptions. First, transfers between parent and child are exempt. Additionally, the transfer tax NYC does not apply to transfers between husband and wife or brother and sister. Transfers made to secure debts or obligations are also exempt. And transfers to a not-for-profit tax-exempt corporation operated for conservation, environmental or historic preservation purposes are exempt as well.

While these exemptions are helpful, most property owners will still be required to pay the RPTT upon selling their home. However, this expense can be deferred until after the closing date by using a 1031 exchange or by moving into a new home in the same city where the original property is located.

Since these taxes are not deductible as ordinary and necessary business expenses, they can make a substantial impact on the sale price of the property. For this reason, it’s important that both buyers and sellers take these additional costs into account when negotiating the sales price.

The new transfer tax NYC thresholds are effective from April 1, 2019. However, contracts entered into prior to that date will be exempt. This is great news for anyone considering a sponsor sale or a new construction project.

Both the RPTT and the NYS transfer tax are typically paid by the seller in the sale of real estate, with the exception of a sponsor sale, which is usually a seller-paid fee.

Unless a buyer is eligible for an exemption, transfer tax NYC will be paid when property is sold in New York City or New York State. This includes homes, co-ops, and condominiums. It also includes land used for agricultural or horticultural purposes and certain manufactured homes. 

Sishodia PLLC

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

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