Closing taxes in New York City are among the highest in the country, and on a flip you pay at both ends. Knowing them before you make an offer is the difference between a deal that works and one that only looks like it does.
Mortgage recording tax: paid when the loan is recorded
| Property and loan size | Borrower’s share, approximately |
|---|---|
| One- to three-family home or condo, loan under $500,000 | 1.8% |
| One- to three-family home or condo, loan $500,000 or more | 1.925% |
| Commercial property or four or more units, loan $500,000 or more | 2.8% |
The tax is charged on the amount of the loan, not the price. On a refinance, an existing mortgage can sometimes be assigned to the new lender and consolidated so that tax is paid only on new money, which is worth asking your attorney about.
Transfer taxes: paid when you sell
| Tax | Rate | Customarily paid by |
|---|---|---|
| New York City transfer tax, one- to three-family homes and condos | 1% up to $500,000; 1.425% above | Seller |
| New York City transfer tax, other property | 1.425% up to $500,000; 2.625% above | Seller |
| New York State transfer tax | 0.4%; 0.65% on homes of $3 million or more and other property of $2 million or more | Seller |
Mansion tax: paid by the buyer
Buyers of one- to three-family homes, condos and co-ops at $1 million or more pay the mansion tax. In New York City it starts at 1% and rises in steps to 3.9% at $25 million or more.
A flip from start to finish
| Buy a two-family for | $900,000 |
| Loan | $1,060,000 |
| Mortgage recording tax at 1.925% | about $20,400 |
| Sell for | $1,600,000 |
| City transfer tax at 1.425% | about $22,800 |
| State transfer tax at 0.4% | about $6,400 |
| Closing taxes on the deal | about $49,600 |
That is why a New York flip needs a wider margin than the same project in many other markets. Our loans can finance the purchase and the whole renovation, but the closing taxes come out of your cash.
Common questions
The borrower, with the lender usually covering a small part on residential loans.
Yes. Any mortgage recorded on New York real property is subject to it.
No, because a co-op loan is secured by shares, not real property. We do not lend on co-ops.