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
coops 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 at buyer
closing credits and you can learn more about this on our
website www.hauseit.com. Final point just to reiterate, if you're purchasing a co-op
apartment in New York City the mortgage recording tax does not apply and that's
because ownership of a co-op is not considered to be real property in the
way that owning a condo house or a piece of land may be as well. When you own a
co-op, you are actually purchasing shares in a private corporation that owns the
building itself so you purchase shares in that corporation and you also receive
a proprietary lease which gives you the right to occupy this specific apartment
that you purchase. So ultimately condo versus caught it's still buying
something it still costs money but it's technically a different form of
underlying ownership structure and in this case with the mortgage recording
tax it's highly beneficial to you if you're buying a co-op because you are
paying lower buyer closing costs and furthermore coops are generally 10 to 40%
less expensive here in New York City. The downside of course with a co-op
is the fact that there's a board approval process where you could be
rejected. There's also restrictions on subletting
over time there may also be a flip tax when you sell so seller closing costs
might be higher for coops vs condos. And finally, when you are looking to sell
your buyer is subject to co-op board approval which would make for a slightly
less certain outcome and exercise compared to if you were selling a condo
or house. We hope you found this video I'm Nick at Hauseit, visit our website
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!