Who Pays Mortgage Recording Tax in NYC?

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Who Pays Mortgage Recording Tax in NYC?

Consider purchasing a home in New York City. The mortgage recording tax must be taken into account unless you are making a cash purchase. A tax “on the privilege” of registering a mortgage is levied by the state, according to the New York Department of Taxation and Finance.

This implies that you must include the cost of this recording tax into the price of the property since it may be a significant expense depending on the amount of the mortgage.

Calculating the Mortgage Recording Tax Rate

The state and municipal elements of the rate are separated. Taxes are owed when the mortgage is registered and are typically paid by the buyer/borrower.

The tax is 2.05% on residential property valued at less than $500,000. The rate increases to 2.175% for real estate valued at $500,001 or more. In every instance, the mortgage lender covers 0.25% of the tax and the borrower covers the remaining amount. The borrower receives a $30 reduction if the property is a one or two family home.

How does the tax appear in actual dollars? Let’s imagine you paid a bargain $650,000 for a stunning single-family house in New York City. The total of your mortgage recording tax is $14,137.50. Since the house is a single-family home and you could be eligible for additional reductions, you also get the substantial $30 discount. If you can locate a property for that amount, a more modest $250,000 home would cost $5,537.50 after your $30 savings.

You may calculate the tax using the mortgage tax calculator on the New York City Department of Finance website.

  Mortgage Electronic Registration System-MERS Definition

Two Ways to Avoid the Mortgage Recording Tax

There’s a potential that if you refinance the property, you won’t have to pay additional recording taxes, but your lender will charge costs of its own to assist you meet the requirements for the exemption (particularly if you’re refinancing with a different lender than the holder of the original mortgage). With the help of your lender, determine if the choice is worthwhile.

If you take over the previous owner’s mortgage via a process known as a mortgage assignment or a “Consolidation, Extension, or Modification Agreement,” you may be able to avoid paying mortgage recording tax. If this applies to your purchase, it’s worth looking into even if the documentation required may have considerable expenditures of its own and may not be less expensive than paying the mortgage recording tax.

Keep note of what you paid since the mortgage recording tax may be applied to the cost basis of your home when you sell it.

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