What taxes do you pay when you sell a house in NY?
New York State imposes a real estate transfer tax on conveyances (sales or other types of transfers) of properties that exceed $500. While there are some exemptions from paying the New York State or NYC transfer tax most sales and transfers will be subject to real estate conveyance fees. Moreover, while most sellers and buyers in New York State will be responsible for state level real estate transfer taxes, NYC seller and buyers are also subject to additional NYC real property transfer taxes.
What is a real estate transfer tax?
In essence, a real estate transfer tax is a real property transfer tax charged by government authorities for the act of changing the ownership or title of real estate.
They can be imposed at many levels of government, including at the federal, state, county and municipal level and are non-deductible. Real estate transfer taxes must always be when changing the ownership or title of real property by either the buyer, seller or both.
Real estate transfer taxes are also referred to as conveyance taxes, realty transfer taxes, deed transfer taxes, real estate transfer fees, real estate conveyance taxes, real property conveyance fees, real estate excise taxes, documentary transfer taxes and documentary stamp taxes. They are usually referred to as real estate transfer taxes but are also commonly known as transfer taxes in NYC.
For a deeper dive into the intricacies of real estate transfer taxes you can explore our resource on All You Need to Know About Real Estate Transfer Taxes in 2023.
What taxes do you pay when you sell a house in New York State?
When selling a house, condo or shares in cooperative housing in New York State, you pay real estate transfer taxes for any consideration — meaning the sale price of real property or interest/shares in real property — of $500 or more. For properties where the consideration is $1 million and over, you must also pay an additional state transfer tax known as the New York mansion tax.
New York State Real Estate Transfer Tax Calculator
Use the New York State real estate transfer tax calculator below to determine the amount owed to the State of New York.
Who pays the real estate transfer tax in New York State?
The New York real estate transfer tax is generally paid by the seller. However, if the party responsible for the tax (seller) is exempt, the other party (buyer) will have to cover it. Similarly, the NYC real property transfer tax — referred to as an additional base tax — are also the responsibility of the seller but must be covered by the buyer if the seller has exempt status.
Although sellers are responsible for covering New York real estate transfer tax and property transfer taxes in NYC, it is not uncommon for the seller to pass on this cost to the buyer as part of the sale price. The likelihood of the state transfer tax (and the transfer tax in NYC) to be passed on to the seller increases when the real estate market is tilted in favor of the seller.
However, in such cases, the transfer of responsibility for these taxes must be explicitly mentioned in the contract between seller and buyer. Per state regulations, the seller cannot pass these costs on directly or indirectly — for example as addition to the sale — unless the buyer is informed and in agreement. If the buyer does pay state transfer taxes and/or city transfer taxes, the cost of the payment is deducted from the total amount of value that is taxed.
In cases where the buyer must pay the state realty transfer fee and/or the NYC transfer tax because the seller has failed to do so, the buyer has the right to legal action against the seller to recover the cost.
Who pays the New York State mansion tax?
While real estate transfer taxes by state and additional city transfer taxes are usually the responsibility of the seller and are only paid by the buyer when contractually agreeing to do so, both the state-level New York mansion tax as well as supplemental NYC tax commonly referred to as the NYC mansion tax are the responsibility of the buyer. If the buyer fails to pay these additional taxes, the seller must cover them.
Is there a mansion tax in Long Island?
Yes, there is a mansion tax in Long Island for all residences of $1 million and over.
The New York state mansion tax is a supplemental state transfer tax applied to all residential sales where the taxed consideration is equal to or higher than $1 million and is thus applied throughout the state.
When it comes to the so-called NYC mansion tax as well as the supplemental base transfer tax charged by NYC, in Long Island they are applied only in King County and Queens County as they are part of NYC. The counties of Nassau and Suffolk are not subject to additional transfer taxes levied by NYC.
How much is the real estate transfer tax in New York State and how is it calculated?
Real estate transfer taxes in New York are calculated as an ad valorem tax, meaning they are charged based on the value of the property or the value of the interest purchased in a property.
New York State imposes a conveyance tax for the sale of properties or interest in real estate properties when the value or share surpasses $500. The state-level transfer tax (New York real estate transfer tax) is calculated at a rate of $2 of tax for each $500 of property value (or fraction of it).
How is the mansion tax calculated in New York State?
The New York mansion tax is calculated as a state transfer tax for homes of $1 million and over as an ad valorem tax. Specifically, the New York mansion tax represents an additional tax of 1% applied to the value (sale price) of the home being sold, as well as to shares in cooperative housing.
New York State Mansion Tax Calculator
Use calculator below to determine your New York State mansion tax bill.
What taxes do you pay when you sell a house in NYC?
When selling a house, condo or shares in cooperative housing in NYC, you pay an additional real property transfer base tax for properties or shares in real properties valued at $3 million and over.
This is an additional base tax applied only within the city boundaries and operates as the NYC real property transfer tax. If the real estate property that is being sold is a non-residential asset, the additional base is applied for deals of $2 million and over.
On top of the NYC real estate transfer tax, an additional surtax is applied to residential sales where the consideration is $2 million or more. This is paid in addition to the New York mansion tax.
New York City Real Estate Transfer Tax Calculator
Use the tax calculator below to determine the full tax bill for home purchases in NYC. This includes both the state-level and NYC-specific real estate transfer taxes, as well as the New York State mansion tax and the NYC mansion tax.
How are real estate transfer taxes calculated in New York City?
Real estate transfer taxes in NYC are calculated on an ad valorem basis.
For non-residential real estate assets, an additional base tax is charged to deals where the conveyance is equal to or higher than $2 million. This NYC real property transfer tax is determined by levying an additional fee of $1.25 per each $500 of value on top of the $2 per $500 state transfer tax.
Supplemental transfer taxes in NYC are also applied to residential sales where the value of the conveyance (sale price of the home or shares in cooperative housing) is equal to or higher than $3 million.
While NYC sellers are responsible for a 1% New York mansion tax paid to the state for residences of $1 million and over, they also must pay an additional mansion tax in NYC for residences (or shares in residences) of $2 million and over. The NYC mansion tax is an ad valorem escalating tax that ranges between 0.25% and 2.9%.
New York City Mansion Tax Calculator
Determine your NYC mansion tax costs with the calculator below. You can also find out your full mansion tax bill by selecting to include the New York State mansion tax as well.
Who is exempt from paying transfer taxes in New York?
In the State of New York, the following cases are exempt from paying property transfer taxes:
- The state of New York, the United States of America, the United Nations, and any of their agencies or instrumentalities.
- Parties engaged in property transfers involving a deed of partition; federal bankruptcy act; tax sale; a modification of a deed previously recorded; a change of identity or form of ownership or organization while the actual owner remains the same; viable agricultural land transfers that will retain their original use for at least three years; tax exempt corporations looking to provide local affordable housing opportunities; not-for-profit, tax-exempt corporations operated for conservation, environmental, or historic preservation purposes; a property used to secure a debt or other obligation;
- Conveyance of real property that is the subject of: development restriction of agricultural, conservation, scenic, or an open space easement; any locally adopted land preservation agreement, provided said exemption is included in the local law imposing the tax; transfer of development rights agreement, where the property being conveyed has had its development rights removed; covenants or restrictions prohibiting development; a purchase of development rights agreement.
- Other conveyances of real property that are exempt from transfer taxes can be found within Chapter 60, Article 31-D, Section 1449-EE of the Consolidated Laws of New York State.
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