New Development Closing Cost Calculator for NYC
NYC and NYS Transfer Taxes
Sponsor Attorney & Document Fees
Estimated Closing Costs
New Construction Related Closing Costs
Typical Buyer Closing Costs
Financing Related Costs
Learn More to Save More
NYC Transfer Tax
The NYC Transfer Tax is a new construction buyer closing cost of 1% for sales below $500k and 1.425% for sales of $500k or more. Higher rates apply for commercial transactions and multifamily properties with 4 or more units. The combined NYC and NYS Transfer Taxes are customarily paid by sellers except for new construction and sponsor sales, for which these closing costs are usually paid by the buyer.
NY State Transfer Tax
The New York State Transfer Tax is 0.4% for sales below $3 million and 0.65% for sales of $3 million or more. The higher rate of 0.65% kicks-in at a lower threshold of $2 million for commercial transactions and residential properties with 4 or more units. Prior to the New York Tax Law amendments in 2019, the NYS Transfer Tax was previously a fixed 0.4% regardless of the sale price. The New York State Transfer Tax is authorized by New York Consolidated Laws, Tax Law – TAX § 1402.
Sponsor Attorney & Document Fees
Buyers of new construction are usually responsible for covering sponsor’s attorney and document preparation fees. This closing cost is often referred to as ‘Closing Fees.’ Here is an example of how this buyer closing cost is structured for a new development:
Working Capital Contribution
Buyers of new construction are usually responsible for making an initial contribution to the building’s Working Capital Fund and/or Reserve Fund. Here is an example of how this buyer closing cost may appear for a new development:
Super Apartment Contribution
Buyers of new construction in larger buildings are usually responsible for making a pro-rata contribution towards the purchase of the live-in super’s apartment from the developer. This is often referred to as a ‘Share of Cost of Residential Manager’s Unit.’ Here is an example of how this buyer closing cost may appear for a new development:
The New York City Mansion Tax is a progressive buyer closing cost which ranges from 1% to 3.9% of the purchase price on sales valued at $1 million or more. The Mansion Tax itself consists of 8 individual tax brackets, with the lowest rate of 1% applying to purchases at or above $1 million and less than $2 million. The highest Mansion Tax rate of 3.9% applies to purchases of residential property valued at $25 million or more. Prior to the 2019 update, the Mansion Tax was a fixed rate of 1% for all purchases of $1 million or more.
Title insurance is an insurance policy against any defects or future claims against the title for issues which were unknown at the time of purchase when the original title search was conducted. This means you’ll be protected if a previous owner comes out of the woodwork ten years after your purchase, and claims that there was a mistake in the chain of title and that he never sold the property to the seller of your property, which means the seller of your property didn’t have a right to sell it to you.
Title insurance comes in the form of an owner’s policy (which protects your home equity based on the purchase price) and a lender’s policy which insures your mortgage lender from any title-related losses on your loan’s principal balance. You can also purchase an additional insurance policy called a Market Value Rider which will automatically step-up the amount of your Title Insurance policy coverage to match appreciation in the market value over time.
The average real estate attorney fee for a purchase transaction in NYC is $2,000 to $3,000. The flat fee rates you are quoted will vary based on the complexity of your real estate transaction. Lawyer fees can be as high as $5,000 for a more complex transaction and for new developments. Real estate attorney fees are typically taken at closing and will be part of the closing costs mentioned in your lawyer’s closing statement. Some lawyers may negotiate for half or some other portion of the fee to be paid upfront, with the remainder to be paid at closing.
If you’re buying a sponsor unit (new construction), it’s customary for the buyer to also cover the seller’s attorney fees in addition to the NYC and NYS Transfer Taxes. This is the reverse of a traditional private resale where sellers pay the Transfer Taxes and cover their own attorney fees. Keep in mind that sponsor closing costs are negotiable.
Move-In Deposit & Fees
Most condos and co-ops in NYC charge buyers a refundable move-in deposit in addition to a non-refundable move-in fee. Exact fees vary by building, and they are usually listed in the resale application (also know as board application). Keep in mind that these fees are usually non-negotiable, as they are contractual based on the underlying management agreement in place between a condo or co-op building and the managing agent.
Board Application Fees
Most condos and co-ops in NYC charge buyers a non-refundable board application fee. The fee is customarily collected upon submission of your board application along with move-in fees & deposits from the buyer and move-out fees & deposits from the seller. Always check your specific coop purchase application to see what forms of payment are accepted. Even if personal checks are permitted, we always suggest sending certified checks because it will eliminate the processing time associated with waiting for your checks to clear the bank. Keep in mind that this fee is non-refundable, meaning you won’t receive any money back if you’re unfortunate enough to be rejected by the co-op board.
Mortgage Recording Tax
The NYC Mortgage Recording Tax is a buyer closing cost which is 1.8% for loans below $500k and 1.925% for loans of $500k or more. The amount of the Mortgage Recording Tax is based on the amount of new loan being underwritten. This means your MRT bill will continue to go down as you increase the size of your down payment.
NYC Mortgage Recording Tax rates are as follows:
Buyers who are financing may be able to reduce the amount of the Mortgage Recording Tax by negotiating a Purchase CEMA with the developer, assuming that the developer has an eligible existing loan balance.
Mortgage Related Fees
The typical mortgage application fee in NYC is $500 to $1000. Some banks will waive this fee for their preferred clients who have above $100k to $250k on deposit with the bank.
The average appraisal fee is ~$750. Banks usually will not offer to cover this, as they have to hire and pay a 3rd party appraiser. Other mortgage-related expenses include a Mortgage Recording Fee of ~$200.
How much are new development closing costs in NYC?
New development buyer closing costs in NYC are 4% to 6% of the purchase price. Additional buyer closing costs specific to new construction properties include NYC & NYS Transfer Taxes of 1.4% to 2.075%, sponsor attorney fees as well as any new development specific working capital and/or super apartment contribution. You can reduce your new construction buyer closing costs in NYC by requesting a Hauseit Buyer Closing Credit.
Is it possible to reduce my buyer closing costs in NYC?
Yes. You can reduce your buyer closing costs and save up to 2% on your purchase by requesting a buyer agent commission rebate through Hauseit. Rebates are a legal and non-taxable way to reduce your buyer closing costs while receiving traditional, full-service representation from a seasoned buyer’s agent throughout the purchase process.
How much can I save with a commission rebate?
At Hauseit, we offer buyers the ability to save up to 2 percent and reduce buyer closing costs through the largest broker commission rebate in NYC. The buyer of a $2 million property in NYC can save $40,000, assuming that the buyer agent commission being offered is 3 percent.
How do buyer agent commission rebates work?
We pair you with an experienced, local partner buyer’s agent who will not only serve the role as a traditional, full-service buyer’s broker but who has already agreed to discreetly write you a check for up to 2 percent of the purchase price at closing, which comes out of the commission paid by the seller. Hauseit’s partner brokers are traditional brokerage firms and agents based locally in NYC who never openly discount or offer rebates online.
Are broker commission rebates taxable?
The IRS has issued an opinion letter stating that closing credits and commission incentives provided by real estate brokers are generally not taxable. As a result, you should not expect to receive a 1099 as your closing gift will generally be treated as a concession on price, and thus a reduction of your cost basis. Please consult your tax adviser for more information.