The NYC and NYS Transfer Tax (RPTT) for Sellers
The combined NYC and NYS Transfer Tax for sellers is between 1.4% and 2.075% of the sale price. Buyers of residential properties priced at $1 million or more in NYC are also required to pay an additional NYS Transfer Tax called the Mansion Tax. The Mansion Tax is between 1% and 3.9% of the sale price, and there are 8 tax brackets which increase based on the sale price. The NYS Transfer Tax and Mansion Tax rates were amended in April 2019 as part of New York’s 2020 Budget.
Estimate your Transfer Tax bill in NYC using Hauseit’s Transfer Tax Calculator for Sellers.
Here is a summary of the updated residential NYS & NYC Transfer Tax Rates as well as the NYS Mansion Tax Rates which were amended in Section 1402 of the Tax Law in April 2019:
- NYS Transfer Tax: 0.4% for sales below $500k, 0.65% for sales of $3 million or more
- NYC Transfer Tax: 1% for sales below $500k, 1.425% for sales of $500k or more
- Mansion Tax: 1% to 3.9%. The lowest rate of 1% applies to purchases of $1 million or more and less than $2 million. The highest rate of 3.9% applies to purchases of $25 million or more
You can estimate your closing costs in NYC by using Hauseit’s Buyer Closing Cost Calculator or Interactive Closing Cost Calculator for Sellers.
The tax rates above 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, such as brownstones with 4 or more units. 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. 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 (Real Property Transfer Tax) 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. The New York State Transfer Taxes (including the Mansion Tax) are authorized by New York Consolidated Laws, Tax Law — TAX § 1402.
What is the NYC Real Property Transfer Tax?
The NYC Real Property Transfer Tax is a seller closing cost of 1.4% to 2.075% which applies to the sale of real property valued above $25,000 in New York City. Although it’s commonly referred to by brokers, buyers and sellers simply as the ‘NYC Real Property Transfer Tax,’ this jargon technically includes two separate Transfer Taxes: a NYS Transfer Tax and a NYC Transfer Tax.
There are three specific NYC & NYS Transfer Tax rates for residential property which are as follows:
- 1.4%: sales below $500k
- 1.825%: sales of $500k or more and less than $3 million
- 2.075%: sales of $3 million or more
The NYC & NYS components of these Transfer Tax rates are as follows:
- 1.4%: 0.4% for NYS, and 1% for NYC
- 1.825%: 0.4% for NYS, and 1.425% for NYC
- 2.075%: 0.65% for NYS, and 1.425% for NYC
The ‘Mansion Tax’ on sales above $1m is technically an extra Transfer Tax charged by New York State on sales of residential properties in cities having a population of 1 million or more. Since the only city in New York with a population above 1 million is NYC, the NYS Mansion Tax is essentially a NYC specific Transfer Tax which is collected by New York State.
Because the Mansion Tax is customarily paid by sellers, it’s generally discussed separately from Transfer Taxes which are usually paid by sellers.
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.”
How Much Is the NYC Real Estate Transfer Tax?
The ‘NYC Real Estate Transfer Tax’ generally refers to the combination of New York State and New York City transfer taxes payable by seller on a real estate transaction.
There are three specific NYC & NYS Transfer Tax rates for residential property which are as follows:
- 1.4%: sales below $500k
- 1.825%: sales of $500k or more and less than $3 million
- 2.075%: sales of $3 million or more
The NYC & NYS components of these Transfer Tax rates are as follows:
- 1.4%: 0.4% for NYS, and 1% for NYC
- 1.825%: 0.4% for NYS, and 1.425% for NYC
- 2.075%: 0.65% for NYS, and 1.425% for NYC
The combined NYC & NYS Transfer Tax Rates are slightly higher for commercial transactions as well as for properties with 4 or more individual units.
There are three specific NYC & NYS Transfer Tax rates for commercial property which are as follows:
- 1.825%: sales below $500k
- 3.025%: sales of $500k or more and below $2 million
- 3.075%: sales above $2 million
The NYC & NYS components of these Transfer Tax rates are as follows:
- 1.825%: 0.4% for NYS, and 1.425% for NYC
- 3.025%: 0.4% for NYS, and 2.625% for NYC
- 3.075%: 0.65% for NYS, and 2.625% for NYC
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%.
If you’re buying a multifamily property with four or more units, you’d pay the higher commercial Transfer Tax rates of 1.825% to 3.075% as opposed to the residential rates of 1.4% to 2.075%.
In summary, the NYC Transfer Tax Rates are as follows:
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.
Read the Full Article: https://www.hauseit.com/nyc-real-property-transfer-tax-rptt/
Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal 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 or accounting advice. You should consult your own tax, legal 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).
