What are NYS and NYC Transfer Taxes?
New York City transfer taxes are simply a tax paid to the government on virtually every real estate transaction. Unlike other closing costs, transfer taxes are due on all property types - houses, condos and co-ops. They even kick in if you're transferring ownership in a corporation that owns property.
Unfortunately, it's not just New York City. New York State has its own transfer tax and so do other states, cities and counties. They're all structured differently but the result is the same - higher closing costs.
Transfer taxes are a big money maker for the city. In fiscal year 2024, the city's budget estimates they'll bring in $1.15 billion (including the mansion tax).
What are the New York Transfer Tax Rates?
The New York State transfer tax is 0.4% for properties below $3,000,000 and 0.65% for those $3,000,000 and up.
The New York City transfer tax is 1% for properties below $500,000 and 1.425% for those $500,000 and up.
The transfer tax is based on the purchase price of the property.
We’re focusing on “Residential Type 1” and “Residential Type 2” properties for this post which include 1-3 family houses, condos and co-ops – basically residential property.
Other property types (office, retail, rental buildings, etc.) carry higher transfer taxes. New York State charges 0.4% for those sold under $2,000,000 and 0.65% when above. New York City then also charges 1.425% if the sale price is under $500,000 and a whopping 2.625% if over $500,000.
Who Pays Transfer Taxes?
In the vast majority of real estate transactions, the seller pays the transfer taxes. The only real exception is in new developments where they are part of the negotiation (but still usually paid by the seller, especially in softer markets).
If the seller finds a way to not pay the tax (or just disappears), the responsibility falls to the buyer but we've never seen that happen.
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How are Transfer Taxes Calculated?
Below are a few examples of the transfer taxes due on different kinds of transactions.
As long as you’re selling a home or apartment, the biggest variable is whether the property is located in New York City and therefore subject to an additional 1% or 1.425% transfer tax.
| Property | Price | NY Transfer Tax | NYC Transfer Tax | Total Transfer Tax |
| NYC Condo | $1,500,000 | 0.4% or $6,000 | 1.425% or $21,375 | 1.825% or $27,375 |
| Westchester House | $975,000 | 0.4% or $3,900 | N/A | 0.4% or $3,900 |
| NYC Co-op | $475,000 | 0.4% or $1,900 | 1.0% or $4,750 | 1.4% or $6,650 |
| NYC Office Building | $125,000,000 | 0.65% or $812,500 | 2.625% or $3,281,250 | 3.275% or $4,093,750 |
What is the History of New York City Transfer Taxes?
The first New York City transfer tax was enacted in 1959. Since then, the amount and scope of the tax has grown from 0.5% just on real property (houses and condos) and now 1.425% on most properties, including co-ops.
The mansion tax is also a transfer tax, typically paid by the buyer. It was created in 1989 and expanded in 2019.
Which Property Transfers are Exempt from Transfer Taxes?
Unfortunately, it's virtually impossible to avoid real estate transfer taxes. There are only a few exceptions carved out for true arm's-length transactions:
- To or from the United Nations or any other worldwide, international organization where the US is a member.
- To or from a non-profit organization.
- To any government body exempt from payment of the tax (see below).
- Used to secure a debt.
- From an agent to its principal or vice versa.
- By an executor as outlined within a will. If a property is sold by an executor though, transfer taxes still apply.
- Where beneficial ownership remains the same.
If you think you qualify for one of these exceptions, we would highly recommend having a CPA analyze your specific situation. These are complicated laws and even in the situations mentioned above, a transfer tax return must be filed.
Who is Exempt from Transfer Taxes?
Bad news here too – basically only the government is exempt from transfer taxes. Unless you’re the federal government, New York State or a foreign government, you have to pay. Even for foreign governments, the property must be used exclusively for diplomatic or consular purposes.
In some circumstances, you can avoid a small portion of the transfer taxes. When selling a house or condo with a mortgage, your buyer can utilize a CEMA. Most of the CEMA savings will come from the buyer avoiding the mortgage recording tax but the seller also saves on the NYS transfer taxes. It's only in certain situations and won't cover much but hey, it's something!
How Do I File and Pay the Real Estate Transfer Taxes?
For a co-op, the seller's attorney will send your transfer tax to the county clerk along with the buyer’s mansion tax (if applicable) and Form TP-584 or TP-584-NYC.
For a condo or house, the title insurance company will collect the transfer tax from the seller and send it in, along with the buyer’s mansion tax (if applicable) with the same form.
How Can I Reduce My Closing Costs As A Seller In New York City?
Transfer taxes are most seller's second largest closing cost. Only real estate broker commissions are larger.
While Yoreevo can't do anything about transfer taxes, we can dramatically reduce your broker commission, enough to pay for the transfer taxes entirely.
For more information about our seller services, please call us or email us at info@yoreevo.com.
for a 1% listing fee.
Note: This post should not be used as tax or legal advice. Please contact a qualified accountant or attorney if you have any questions about your particular situation.
