What Is the Mortgage Recording Tax in NYC Real Estate?

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What is the Mortgage Recording Tax in New York City? We will demystify this topic in the following video, my name is Nick from Hauseit. We are the largest For Sale by Owner and buyer agent commission rebate company based here in New York City established in 2014. So let's get started.

The Mortgage Recording Tax is the largest buyer closing cost in New York City. Buyer closing costs for co-ops are approximately 2% and they are around 4% for condominiums assuming you are financing. The mortgage recording tax only applies to real property and therefore coops are excluded and that's the reason largely why co-op buyer closing costs are approximately 2% lower than buyer closing costs for condominiums.

The Mortgage Recording Tax itself is 1.8% for loans below $500,000 and 1.925% for loans of $500,000 or more. Keep in mind this amount is based on the actual size of your loan as opposed to the purchase price so if you're buying a $1,000,000 place at 20% down your loan size is $800,000 and therefore the mortgage recording tax would be that higher rate of 1.925% on the entire loan amount of $800,000. Technically speaking, the mortgage recording tax is actually 2.05% and 2.175%. However, the lender customarily covers 0.25% of this amount for residential properties and that's the reason why the actual mortgage recording tax rates. We mentioned are again 1.8% for loans below $500,000 and 1.925% for loans of $500k or more.

It's also important to point out that the Mortgage Recording Tax has a third and higher rate of 2.80% for other property types and this would consist of commercial property as well as multifamily properties with 4 or more units. In the case of other property types, the lender does not customarily cover any of the Mortgage Recording Tax and therefore in the row on lender pays the amount there is 0 so the buyer would pay that full amount of 2.80% for other property types. Again, commercial and multi-family properties with 4 or more units.

Now, one pro tip you can reduce the amount of the mortgage recording tax as a buyer under certain circumstances. Those circumstances are as follows: the property type would have to be a condo or a house since a co-op again it doesn't have the mortgage recording tax in the first place. Secondly, the seller needs to have some sort of reasonably large amount of existing loan balance. If both of these conditions are met, you can reduce the amount of the mortgage recording tax through what's called a Purchase CEMA.

Now, we have an entire other video dedicated to this topic but in short what this allows you to do is to actually have the existing loan that the seller currently has be assigned to you as the purchaser and this reduces the amount of so called new loan money that is originated and therefore it reduces the amount of loan money that must be recorded. So, you would save that Mortgage Recording Tax on the amount of the loan that is transferred. Moreover, with a Purchase CEMA this seller would actually avoid paying the New York State transfer tax on the portion of the actual loan balance which is assigned.

Now, usually the savings are of course much more biased in the favor of the buyer because the buyer saves close to 2% when the seller is saving less than half a percent on the transfer tax so usually it's negotiated such that in order to obtain the consent of the seller the buyer and the seller usually agree to split the savings. So, in short, the mortgage recording tax is the largest buyer closing costs in New York City and buyer closing costs are really high. Now there are ways to reduce your buyer closing costs if you're looking to buy a place in New York City. Easiest way is through a buyer agent commission rebate also known as a Hauseit Buyer Closing Credit and you can learn more about this on our website: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/

We hope you found this video helpful. I'm Nick at Hauseit, visit our website https://www.hauseit.com to learn about ways to save money when buying selling here in New York City and if you like this video do us a favor like and subscribe and leave us a comment and we'll do our best to get back to you!

Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
NYC Buyer Closing Cost Calculator: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/
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Hauseit LLC, Licensed Real Estate Broker
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