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Transfer Tax, the devil is in the details!

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Steven J. Colon Esq, contributing blogger and a member of our YCL team:

Seller’s must pay the NYS and local transfer tax UNLESS otherwise agreed to. This typically comes up in New Construction but can be found elsewhere. However……..

Use caution when purchasing a property for less than $500,000.00 in NYC and adding to it a Seller’s Concession which increases the Purchase price to exceed $500,000.00

The Transfer tax on the amount given in a seller’s concession is normally credited to the Seller at closing. For NYC transfer tax on a purchase of $500,000.00 or less, it is 1%. However, for purchases of more than $500,000.00 the percentage increases to 1.425%.

Now this does not seem like a drastic jump, however, the 1.425% is now on the total purchase which if a buyer had to reimburse for the increase in transfer tax, it now is significantly more since it affects not only the seller’s concession, but rather the entire purchase.

By way of example.

Ex#1- Purchase price is $490,000.00 with a sellers concession of $10,000.00 would mean that the reimbursement for the NYC transfer tax is $100.00.

Ex#2- Purchase price on a $490,000.00 with a sellers concession of $11,000.00 would mean the purchase price is now $501,000.00 and the rate of the transfer tax on the entire purchase is now 1.425%. So the seller would require reimbursement of $2,082.50 (.425% on $490K)for the increase of taxes on the $490,000.00 and $156.75 for the $11,000.00.

Ex#1 = $10,000 SC costs for NYC only $100.00
Ex#2 = $11,000 SC costs for NYC only $2,239.25

Note: NYS imposes a rate of $4/thousand regardless of above or in other words in addition to the local transfer tax

Always check the area you are selling in for the local transfer tax rules

Other areas:

Mount Vernon the first $100,000.00 is excluded but the balance is taxed at a rates of 1% of sale price.

Ex. $200,000.00 sale price is subject to $1,000.00 Mt. Vernon Transfer tax

Yonkers is 1.5% of the selling price

Steven J. Colon, Esq.
MVCB, LLP.
3928 E. Tremont Ave
Bronx, NY 10465
Reply to:
Email: info@mvcblaw.com
(T) 646-556-6620
(F) 646-607-2495
(C) 646-623-9431

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