Real estate transfer taxes in New York can be quite complex, as they can vary depending on the location within the state and the value of the property being transferred. As tax laws may change from time to time, we always impress upon our clients to consult with a tax professional or the New York State Department of Taxation and Finance for their inquiries and to obtain the most up-to-date information as it relates to our clients’ transactions.
Here are some of the transfer taxes that are applicable to real estate transactions in New York and who typically pays them in the transaction, unless otherwise agreed upon by the parties:
- New York State Transfer Tax (Seller): This tax is generally calculated at the rate of $2 for every $500 of the purchase price.
- New York City Transfer Tax (Seller): These are additional taxes added at a rate depending on the value of the property.
- Mansion Tax (Buyer): The Mansion Tax applies to residential properties with a purchase price of $1 million or more. The rate can vary depending on the location of the property. This Mansion Tax is an additional tax imposed, and it starts at 1% of the sales price where consideration is $1 Million or more. In New York City, a supplemental mansion tax in imposed in addition to the statewide 1% mansion tax rate:
- 1% for properties between $1 million and $2 million
- 1.25% for properties between $2 million and $3 million
- 1.5% for properties between $3 million and $5 million
- 2.25% for properties between $5 million and $10 million
As noted above, the transfer taxes can be negotiated between the parties to the transactions, meaning that the typical responsibility may be shifted to the other party, if agreed upon in writing. Additional, exemptions from transfer tax can be available to sellers based on either the parties themselves or the type of transfer (i.e. a change in ownership without consideration because you are putting the property into a holding company.
Because real estate transactions can be complex, and tax laws can change from time to time, it is crucial to work with a real estate attorney and your tax professional when buying or selling property in New York to ensure compliance with all applicable laws and to understand the most current tax rates and exemptions.
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.
