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The NYC and NYS Transfer Tax (RPTT) for Sellers

The combined NYC and NYS Transfer Tax for sellers is 1.4% for sale prices at or below $500k and 1.825% for deals greater than $500k. 0.4% of the total transfer tax is collected by NYS, while the remainder is collected by NYC. These rates apply to the sale of condos, co-ops and one- to three-family homes. Different RPTT rates apply for commercial deals and other property types.

Technically, the RPTT tax rate goes up from 1.825% to 2.825% for sale prices over $1 million. The extra 1% is commonly referred to as the Mansion Tax. Since the Mansion Tax is customarily paid by the buyer, it’s typically excluded when talking about NYC and NYS Transfer Taxes since they’re paid by sellers.

NYC and NYS Transfer Taxes are the second largest closing cost for sellers aside from broker commissions. You can estimate your seller closing costs in NYC using this interactive closing cost calculator for sellers.

According to the NYS Department of Taxation and Finance, sellers in NYC paid a total of $716,208,726 in NYS Transfer Taxes in fiscal year 2018. The NYC component of the RPTT (Real Property Transfer Tax) raised $1.775 billion for NYC in 2016 according to the NYC Office of Management and Budget.

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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What is the NYC Real Property Transfer Tax?

The NYC Real Property Transfer Tax is a seller closing cost which applies to the sale of real property valued above $25,000 in New York City. The specific tax rate depends on the sale price and the type of real property in question. For a traditional condo, co-op or one- to three-family house, the combined Transfer Tax rate is 1.4% if the value is $500k or below and 1.825% if the value is higher than $500k.

The 1% Mansion Tax on sales above $1m is technically an extra Transfer Tax charged by New York State. This means that the NYS Transfer Tax goes up from 0.4% to 1.4% for sales above $1 million. However, it’s generally discussed separately from Transfer Taxes since buyers customarily pay the Mansion Tax while sellers pay Transfer Taxes.

As per the NYC Department of Finance, “The Real Property Transfer Tax (RPTT) also applies to the sale or transfer of at least 50% of ownership in a corporation, partnership, trust or other entity that owns/leases property and transfers of cooperative housing stock shares.”

The NYC and NYS Transfer Tax for condo and co-op sellers is 1.425% for sales of $500k or less and 1.825% above $500k. Tax rates vary by property type.

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How Much Is the NYC Real Estate Transfer Tax?

The NYC Transfer Tax is 1.4% for sale prices at or below $500k and 1.825% for sale prices above $500k. Technically speaking, 0.4% of this is collected by NYS. This means that the official ‘NYC Transfer Tax’ rates which are earned by the city are 1% and 1.425%, respectively. However, the phrase ‘NYC Transfer Tax’ almost always includes the 0.4% NYS Transfer Tax component.

The combined NYC & NYS Transfer Tax Rates of 1.4% and 1.825% apply to the sales of one to three family homes, condos and co-op apartments. For other types of real estate transfers, the NYC Transfer Tax (RPTT) ranges between 1.825% to 3.025%. 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%. Adding the 0.4% NYS Transfer Tax component results in the combined Transfer Tax rates being 1.825% and 3.025%, respectively.

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 1.825% to 3.025%.

The NYC and NYS Transfer Tax for condo and co-op sellers is 1.4% for sales of $500k or less and 1.825% above $500k. Tax rates vary by property type.

If you’re buying a multifamily property with four or more units, you’d pay the higher Transfer Tax rates of 1.825% for values at or below $500k and 3.025% for values above $500k. Once again, 0.4% of this amount is collected by NYS while the rest is pocketed by NYC.

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

The combined NYC and NYS Transfer Tax for sellers is 1.4% for sale prices at or below $500k and 1.825% for deals greater than $500k. 0.4% of the total transfer tax is collected by NYS, while the remainder is collected by NYC.

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 the Property Transfer Tax in NYC?

It’s customary for sellers to pay the RPTT (Real Property Transfer Tax) when it comes to the sale of condos, co-ops and houses. The most common exception to this is in the case of sponsor sales. A sponsor sale refers to the first time a property is sold from the original owner/developer to a buyer.

Unlike for traditional private resales, the transfer tax is usually paid by buyers in the case of sponsor units. Furthermore, buyers also typically pay seller legal fees when buying a sponsor unit. However, this can be negotiable depending on how motivated the developer is to sell inventory.

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?

The NYC Transfer Tax is calculated by multiplying sale prices of $500k or below by 1.4% or multiplying sale prices more than $500k by 1.825%. The NYS Transfer Tax of 0.4% is included in the rates above. If we exclude the NYS Transfer Tax, the technical NYC Transfer Tax rates are 1% and 1.425%, respectively.

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% for NYC and 0.5% for NYS for a total of 1.825%. Therefore, you calculate the NYC Transfer Tax as follows:

NYC Transfer Tax: $1,750,000 x .01425 = $24,937.50
NYS Transfer Tax: $1,750,000 x .004 = $7,000

PRO TIP: The NYC Transfer Tax is the second largest NYC seller closing cost after the typical 6% commission bill paid by sellers. 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.

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How Are NYC & NYS Transfer Taxes Different?

Both NYC and NYS charge a Transfer Tax on the sale of real property. The NYS transfer tax is 0.4% of the sale price. NYS also charges an extra Transfer Tax of 1% for sales of $1 million or more. This additional Transfer Tax is most commonly referred to as the Mansion Tax, and it’s customarily paid by buyers.

The NYC Transfer Tax is between 1% to 1.425% for sales of condos, co-ops and one- to three-family houses. The lower rate applies to sales of $500k and below.

Most real estate professionals in NYC simply refer to the combined NYC & NYS Transfer Tax bill as the ‘NYC Mansion Tax.’

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How to Reduce Seller Closing Costs 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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Selling FSBO in NYC is likely the first thing which comes to mind if you are thinking of ways to save money on broker commissions. Unfortunately, traditional FSBO does not work well in NYC since most buyers have agents who search for listings in RLS (which FSBO sellers can’t access).

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Because your listing will appear just like every other traditional, RLS-listed property, you will be able to ‘co-broke’ more-effectively with the buyer’s agents who control 75% of the buyers in NYC. Hauseit’s listing service also helps reduce the traditional NYC FSBO broker harassment.

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Are There Transfer Tax Exemptions in NYC?

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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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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