Effective July 1: New York Real Estate Transfer Tax Amendments

The recently adopted NY State 2020 budget includes a number of amendments to the New York State & New York City Real Estate Transfer Tax laws effective July 1, 2019.

New York State

The State imposes a tax of $2.00 for each $500 of consideration (.40%) for the sale of real property or an interest in real property, and an additional transfer tax (“Mansion Tax”) of 1% of conveyance of real property in excess of $1 million.  The law was amended to restate that if a buyer fails to pay the mansion tax, the tax becomes a joint and several liability of the seller and buyer.  This update now coincides with the rule that if the seller does not pay the regular transfer tax it becomes the obligation of the buyer.

New York City

The major changes affect the New York City transfer tax laws.  For conveyances of residential real property of greater than $3 million and conveyances of other than residential real property greater than $2 million, an additional base tax of $1.25 for each $500 (.25%) is imposed.  For purposes of conveyance, mixed use property is considered residential real property.  Residential real property is any part of a personal residence and includes one, two and three family houses as well as a condominium or cooperative apartment unit. This tax is required to be paid by the seller.

In addition, New York City has added a supplemental tax on residential real property when the consideration for a conveyance is greater than $2 million.  The supplemental tax rate begins at .25% and increases up to 2.9% for conveyances of $25 million or more.   (Here is a chart issued by NYC to find the exact tax based on the value of the consideration).  The supplemental tax is required to be paid by the buyer.

Multiple transfers of real properties being sold to the same buyer will be treated as a single conveyance and subject to the taxes based on the total sales price.  If any of the above conveyances that had an existing contract signed as of April 1, 2019, the conveyance is considered a grandfathered conveyance and not subject to the above law changes.

For questions or more information on the amendments to the New York State & New York City Real Estate Transfer Tax laws, please contact Jeffrey Roude, a real estate partner in Sax’s NYC office at [email protected] or (646) 616-1601.

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