What is the Transfer Tax in NYC and NYS Real Estate Purchases?

In New York, the transfer tax is paid at closing on residential property, signaling the transfer of the title and ownership from one party to another.

The full term is the Real Property Transfer Tax and applies to all residential property deals, including condos and co-ops.

Typically, this tax is to be paid by the seller. However, if the seller is exempt or refuses, this cost is passed onto the buyer.

Either way, someone will pay the transfer tax as local and state municipalities must be satisfied at the closing table, or there is no deal.

Be very clear: New York State and New York City have their transfer taxes imposed on each real estate deal occurring within the five boroughs.

If you purchase in another city or town in the state, they may or may not also impose their transfer tax.

Your entire budget should be carefully calculated before you start house hunting or selling because closing costs go far beyond mortgages, down payments, and attorney and broker fees.

Find out more about how you can ready yourself for your home purchase.

How Much is the Transfer Tax?

Remember that the transfer tax rate differs for the city and the state.

For all residential transactions from $499,999 and less, New York City collects 1% of the sale price.

For transactions that are $500,000 and higher, that rate goes up to 1.425%.

The state passed new transfer taxes in April 2019. Any residential sale below $3 million will remain at the established 0.4%. Deals from $3 million and up will go up to 0.65%.

So, for a condo selling at $325,000, the transfer tax would come out to $3,250 for just the city and $1,300 for the state--making your total $4,550 for transfer taxes.

At $4,140,000, $58,995 is due for the city, and $26,910 for the state. The total for transfer taxes ends up being a whopping $85,905.

New York City Transfer Tax

New York State Transfer Tax

Can a Seller Force Me to Pay the Transfer Taxes?

In essence, yes. They can if the negotiations work out that way.

In New York City, it's typical for a sponsor to pass on the transfer taxes to the buyer for new developments.

For one reason or another, this has become common practice.

If the condo, co-op, or building is "hot," the seller may be able to demand that any buyer pay the transfer taxes at closing.

However, this can be an option for sponsors to explore in a soft market or buildings where units are needed for a long time. They may offer to pay half or all entirely.

You, in turn, can also offer a seller of a resale to pay for their transfer taxes as a bargaining chip to negotiate for items you want.

Some items you can bargain for are renovation or repairs to the property, paying property taxes or standard charges for the remainder of the year, or coming in at a lower offer.

Are There Any Other Taxes I Should Be Aware of?

You can expect other taxes, mainly sales transactions, due at closing.

For example, a sale of a co-op will incur a flip tax. This tax is outlined in the co-op's bylaws and varies from building to building.

The flip tax can be anywhere from 1%-3% and can be implemented according to sales price or by shares.

You may even encounter this flip tax with specific condo boards.

Unlike the transfer tax, this tax is imposed and collected by the co-op or condo board, not the state or city government.

However, like the city and state, a co-op board can nullify a sale without paying this fee.

Another tax to consider is the mansion tax for all residential transactions valued at $1 million.

To find out more excellent details on how much you can incur for closing, read our article on the New York State mansion tax and the changes made.

The mansion tax starts at 1% of the sales price in the $1-$2 million range.

That's why buying a property for $999,999 can make all the difference in whether you'll pay an additional $10,000 at closing.

This mansion tax can go as high as 3.9% for residential property selling for $25 million and over--that's $975,000 and upwards!