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What is the New York real estate transfer tax and who pays?

On Behalf of | Jul 29, 2021 | Real Estate |

If you’re buying or selling property in the State of New York, you might have heard about its real estate transfer taxes. These are the taxes that the State of New York and certain cities charges for transferring the deed from one party to the next.

In New York, the transfer tax rate equals $2 for each $500 or part thereof of the consideration. In certain cities, there are local transfer taxes.  In Mount Vernon and Peekskill, there is a 1% tax paid by sellers. In Yonkers, the transfer tax is 1.5%.  In New York City it is 1% if under $500,000; 1.425% if over.

Who pays the real estate transfer tax in New York?

The tax is generally paid for by the seller and can’t be imposed on the buyer. However, there are certain exceptions to this rule (new construction often transfers the obligation to the buyer).

There are situations in which the seller is exempt from having to pay the real estate transfer tax. In that case, the buyer has to pay the tax.

Additionally, there are supplemental taxes that the buyer is responsible for, such as the additional 1% “mansion” tax on residential purchases of $1,000,000 or more

What happens if the seller doesn’t pay the transfer tax?

There are some situations in which a seller may be exempt from a transfer tax, but if it is later determined that a tax was due, the burden could fall on the buyer, since both are liable for the tax.