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NYC Real Property Transfer Tax (RPTT) | NYC Transfer Tax FAQ

The NYC Real Property Transfer Tax (RPTT) is one of the largest closing costs for NYC sellers. In this article, we introduce the NYC Transfer Tax and explain how you can reduce your seller closing costs.

What is the NYC Real Property Transfer Tax?

The NYC Real Property Transfer Tax is a seller closing cost levied on the transfer of real property in NYC valued above $25,000. It is the second largest NYC seller closing cost after the typical 6% NYC commission bill.

The NYC Transfer Tax is between 1% to 2.625% of the sale price, depending on the value and type of the property.

NYC’s RPTT is authorized by the New York Tax Law Section 1201(b) and enacted by Title 11 (Chapter 21) of the New York City Administrative Code.

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How much is the New York City Real Estate Transfer Tax (RPTT)?

The NYC Transfer Tax is between 1% to 2.625% of the sale price, depending on the value and type of the property.

For a typical one to three family home, condo or co-op apartment, the NYC Real Estate Transfer Tax is between 1% to 1.425%. If the value is $500,000 or less, the NYC Transfer Tax is 1% of the sale price. If the value is more than $500,000, the New York City Real Estate Transfer Tax is 1.425%.

For other types of real estate transfers, the NYC Transfer Tax (RPTT) ranges between 1.425% to 2.625%. If the value is $500,00 or less, the NYC Transfer Tax is 1.425% of the sale price. If the value is more than $500,000, the NYC Transfer Tax is 2.625%.

The RPTT also applies to the transfer or sale of 50% or more ownership in a partnership, corporation, trust or other business entity that owns and/or leases property. These sorts of transactions would also be covered by the higher Transfer Tax rates of 1.425-2.625%.

In summary, the NYC Transfer Tax Rates are as follows:

For a 1-3 family home, condo or co-op:

  • $500k or less: 1%

  • Greater than $500k: 1.425%

Other property types (commercial and industrial):

  • $500k or less: 1.425%

  • Greater than $500k: 2.625%*

PRO TIP: 1% of the 2.625% RPTT tax levied on commercial deals above $500k is allocated to a special fund for the New York City Transit Authority (NYCTA), the City Paratransit system and the MTA.

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Who pays property transfer tax in New York City?

For a traditional private sale of real estate in NYC, the RPTT (Real Property Transfer Tax) is typically payable by the seller. The most common exception to this is in the case of sponsor sales (i.e. new construction), whereby the buyer traditionally pays the NYC and New York State transfer taxes as well as the sponsor (seller) legal fees.

If the seller is exempt from RPTT or does not pay the tax, both NYC and NYS may seek to impose the unpaid transfer taxes as well as the NYC Mansion Tax on the buyer.

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How is the NYC Transfer Tax calculated?

To calculate the NYC Transfer Tax payable on your sale, you need to determine the appropriate tax rate based on the sale price and property type and multiply this by the sale price.

For example, let’s say you are selling a co-op in Manhattan and the sale price is $1,750,000. The applicable transfer tax rate in this instance is 1.425%. Therefore, you calculate the NYC Transfer Tax as follows:

NYC Transfer Tax Payable: $1,750,000 x .01425 = $24,937.50

PRO TIP: The NYC Transfer Tax is the second largest NYC seller closing cost after the typical 6% NYC commission bill. However, you should be aware that New York State also charges its own Transfer Tax of 0.4% in addition to the NYC Real Estate Transfer Tax.

How can I reduce my closing costs as a seller in NYC?

Although it’s not possible to avoid paying the NYC and NYS transfer taxes, you can reduce or fully eliminate the largest seller closing cost which is the traditional 6% NYC broker fee. Seller commissions in NYC have traditionally been non-negotiable, and virtually all sellers still agree to pay 6%.

Here are a few ways you can substantially reduce your seller commission bill or eliminate broker fees altogether when selling in NYC:

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Our NYC Flat Fee MLS (RLS) listing service uses the same listing syndication technology as traditional, full-service agents who charge 6% in commission. Your FSBO listing will receive the same marketing exposure as if you had hired and paid 6% to a traditional listing agent.

Because our service makes your FSBO listing look like every other traditional, RLS-listed property, we allow you to more effectively ‘co-broke’ with the buyer’s agents who control 75% of the buyers in NYC. Our listing service also helps reduce the traditional NYC FSBO broker harassment.

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What are the exemptions from the NYC RPTT Transfer Tax?

NYC exempts Federal, State and City entities from the payment of RPTT as well as the filing requirement. In addition, the RPTT does not apply to any of the following deeds:

  • A deed, instrument or transaction by or two the United Nations or any other global organization of which the United States is a member

  • A deed, instrument or transaction by or two any entity operated exclusively for charitable, educational or religious purposes or for the purposes of preventing cruelty to children and animals

  • A deed or instrument given solely as collateral/security for a debt/loan.

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What is the history of the New York City Real Property Transfer Tax?

New York City has collected the RPTT (Real Property Transfer Tax) since 1959. The city raises approximately $1-2 billion annually from the transfer tax alone. According to the city’s tax revenue forecasting documentation, the RPTT accounted for 2.2% of the city’s overall tax revenue in 2012.

Here is a brief timeline of the history of New York’s Real Property Transfer Tax:

  • 1959RPTT enacted with a tax rate of 0.5% of the sale price

  • 1968 – NYS enacts its own transfer tax of 0.4% on residential and commercial property

  • 1971 – RPTT tax rate raised from 0.5% to 1.0%

  • 1982 – RPTT tax rate raised from 1% to 2% for commercial transfers on/above $500k

  • 1989 – NYS imposes a mansion tax of 1% on the sale of residential real property valued above $1 million

  • 1989 – NYC raises the RPTT tax rates and expands the tax base to include the sale of residential co-operative apartments

  • 1997 – NYC enacts a RPTT reduction for the amount of any mortgage assumed by the transferee (buyer)

Related Questions | People Also Ask:

Who pays property transfer tax in New York?

Both the New York State and New York City property transfer taxes are typically paid by the seller. The exception would be in the case of buying new construction or buying a sponsor unit, whereby the buyer traditionally pays the transfer tax as well as the sponsor (seller) legal fees.

What is the transfer tax?

A transfer tax is a seller closing cost levied on the transfer of real property in New York City. Both NYC and New York State charge separate transfer taxes on sellers. Transfer taxes are one of the largest closing costs for NYC sellers after the typical 6% NYC broker fee.

How much is transfer tax in NY?

The NY transfer tax is 0.4% of the sale price. If the sale price is one million or more, NY also charges an additional transfer tax (mansion tax) of 1% of the sale price. The NY transfer taxes are charged in addition to the separate NYC transfer tax. Transfer taxes are typically paid by the seller, and the NY mansion tax is traditionally paid by the buyer.

When is the NYC RPTT payable?

The RPTT payable at the time the deed is registered with the City Register. If the transaction does not involve a deed, then the RPTT must be paid directly to the NYC Department of Finance (DOF). The taxpayer must file a return and pay the RPTT within 30 days after the date of the transfer.

Who pays real estate transfer tax in New York?

Both the New York State and NYC real estate transfer taxes are typically paid by the seller. The exception would be in the case of new construction or a sponsor sale, whereby the buyer traditionally pays the transfer tax as well as the sponsor (seller) legal fees. The mansion tax on sales above $1 million is usually paid by the buyer.

Transfer Taxes When Selling Combined Apartments

NYC will by default charge sellers the higher transfer tax rates for non-residential properties if you sell two or more units within the same building within a 12 month period. This can impact many sellers of combined apartments who have not fully merged the apartments in the eyes of New York City.

To fully combine two apartments, you will first of course need approval from your building’s board. Then you will need the NYC Department of Building’s approval. After the renovations are complete, you will need a Letter of Completion as well from them. If have condominium units, you will also need to amend the condo declaration in order to merge the tax lot. For condo owners, only after this step is done will they begin receiving a single property tax bill vs a property tax bill for each unit.

If you haven’t merged the tax lot, our partner lawyers have had a 100% success rate so far in appealing a higher transfer tax rate. You will need a affidavit from an architect demonstrating that the combined units are truly one apartment.

Pro Tip: You should avoid paying the sponsor’s transfer taxes when buying two or more new construction units. This is especially important if you buy one unit first, and then decide to purchase a second one some time later in the same building. Because of the 12 month look back described above, you may be retroactively hit by the higher transfer tax rate for non residential properties on both deals.

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NYC Real Property Transfer Tax (RPTT) | NYC Transfer Tax FAQ – PDF

Source: Tax Revenue Forecasting Documentation, Financial Plan Fiscal Years 2012-2016. (2013, April 22). Retrieved from http://www.nyc.gov/html/omb/downloads/pdf/methodology_2013_04.pdf

Disclosure: Hauseit and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).

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