In this video
we are going to walk you through how to calculate your seller transfer tax bill in New York City using houses
transfer tax calculator, which is available on hauseit.com
So the purpose of the calculator is to help you estimate as a seller
what would be your transfer tax bill when closing closing costs are a very important consideration for sellers in the city
Primarily because southern closing costs are really high now.
The largest component of seller closing costs is the broker commission of
6%. There are a number of ways you can reduce or eliminate that
including listing through an agent assisted Fizbo flat fee model or
considering a 1% full-service option.
You can learn about both of those by .using the dropdowns here under sellers
You have full service for 1% as well as agent assisted Fsbo.
Going back to the transfer tax calculator we have on the right here a hypothetical
output for a sale price of 1.5 million dollars for a condominium.
Now there's a couple of components of the transfer taxes in the city. Technically there are 3 components
the first component is the New York State transfer tax payable by sellers.
This is collected by the people up in Albany so think New York State again
the capital is collecting this money and it applies to any sale in New York State.
There are two transfer tax rates for New York State
the more common one is 0.4% and there is actually a newer transfer tax rate slightly higher rate of
0.65 percent which is for sales of 3 million dollars or more.
This higher rate was actually enacted in 2019 as part of changes to the New York tax law.
One thing to mention about the higher rate of 0.65% It does also apply to commercial
transactions as well as
townhouses or homes with four more units, but it actually kicks in at a lower threshold of two million dollars for these types of deals
compared to three million for your customary condo co-op and one-two-three family transaction.
The second component of transfer taxes for sellers is the New York City transfer tax again here
there are also two rates.
There is a more common rate of one point four to five percent which applies to
sale prices at
500k or more.
Rather above 500k and there's a lower transfer tax rate of one percent for anything less than or equal to five hundred pet.
Now given where sale prices are today
It's going to be more common for you to see a transfer tax rate of one point four to five percent
but let's play around and show you a few examples
so let's say you're selling a three hundred and fifty thousand dollar condominium in bed-stuy
in this case the lower New York City transfer tax rate of one percent will apply now if we go to five hundred thousand as
you'll see here. We still have the lower tax rate of one percent, but the moment we go above 500k.
You're gonna see that there is a higher transfer tax rate of one point four to five percent
Now as far as the New York State transfer tax is concerned,
the threshold there is three million dollars as to when that rate goes up to zero point six five percent
So let's go ahead and test that and start with something. That is two point five
Million dollars you'll see here that the transfer tax rate is still the lower zero point four percent.
If we take this up to three million
You'll see that we go to the higher rate of zero point six five percent.
Now in terms of the transfer tax itself, we talked about the New York State component and the New York City component
But there's also another transfer tax that comes into play for
sale prices of a million or more which is called the mansion tax.
The mansion tax is not customarily referred to a transfer tax primarily because sellers paid transfer taxes and
buyers pay the mansion tax.
But because this is a transfer tax calculator we felt it was appropriate to include the mansion tax here just for your own
analysis, so if you look at this example
the seller is going to be paying a total of two point zero five percent, which is the New York State transfer tax
and the New York City transfer tax and the buyer is going to be paying that mansion tax of a one and a half percent
so the total transfer taxes are a little over a hundred K for this property and
Majority of them are going to be paid by the seller.
As far as the mansion tax is concerned,
we do have another calculator
for buyers which will help you more accurately determine your mansion tax bill.
But just as a quick summary
we have eight different tax brackets for the mansion tax in New York City as of 2019.
The highest rate is three point nine percent which applies to sales of twenty five million dollars or more
so as you can see here, if we raise that sale price and the mansion tax rate goes up to its maximum the
sale price of 1 million to two million dollars is going to be affected by a 1% mansion tax rate.
So whether we're at 1 million or 1.4 million,
doesn't really matter if the mansion tax rate is still going to be 1%.
So looking more broadly at closing costs for sellers,
the transfer taxes are going to be some of the highest components of your total sell at closing costs bill
but for more information on that we can go to the
seller closing cost calculator and
here we can actually plug in the same scenario, so let's put in a 1.4 million dollar condo
and let us see what
closing cost we have here. So the total closing costs are going to be over 8% a lot of money, obviously
the transfer taxes are here.
These are the ones we calculated on the other calculator
and as you can see the bulk of the closing costs really come in the form of the broker commission.
Commissions are really high in New York City. They've been high for a very long time
There's a number of reasons why but presumably as a seller the goal is to figure out how to minimize them fortunately
there are a few options out there
you can possibly list through an agent assisted Fsbo, which is more of a do-it-yourself option gives you the exposure and marketing
breadth and reach as if you hired a listing agent.
But it allows you to run the sale process allows you to save up to 6% if the buyer does not have a buyer agent.
Another option, if you have less time, you could consider the 1% full-service option
gives you the same
indistinguishable approach to sale transaction as if you hired a traditional agent, you're just paying a lot less.
So there's a number of options out there to save some money would certainly encourage you to do so because
anything you pay out in closing costs obviously takes away from
capital gains it reduces the amount of money you can reinvest into
possibly a larger home or certainly takes away the possibility to invest that money in the stock market to grow your net worth over time.
Final reminder a couple of the calculators here if you are selling if you want to figure out your coops flip tax calculator,
you can use that to calculate your bill.
There's also a co-op tax deduction calculator oftentimes your listing agent will ask you what the tax deduction percentage is for your listing
so by way of example, you can actually go to that calculator and
using the information provided by your managing agent
the real estate tax deduction per share and the mortgage interest deduction per share
you can calculate the tax deduction percentage for your listing.
Leave a comment if you have any questions otherwise
we wish you the best of luck and we hope can find a way to
keep that closing cost ill down and best of luck with the overall sale.