The Nest

NestApple's Real Estate Blog

Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.

Closing Costs NYC: Condo vs Co-op Guide for 2024

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Despite paying sky-high prices for apartments in New York City, some NYC buyers may not realize there are additional closing costs they haven’t considered. These extra costs can add up, especially for condos. This article will compare the closing costs for condos vs. co-ops that NYC buyers must pay.

Co-op vs Condo: How much should I expect to pay for buyer closing costs in NYC?

  • When buying a co-op in NYC, buyers should anticipate paying approximately one to two percent of the purchase price or two to three percent if the apartment costs morecoop apartments in new york city - Closing Costs NYC than $1 million.
  • A safe range for condos would be two to four percent, with the lower end applied to properties under a million dollars with small mortgages. Closing costs for new construction can be much higher, sometimes exceeding 5%.
NestANestApple’sing costs calculator for buyers can give you a quick estimate of what you’ll

Why are NYC condo closing costs higher?

Condos are more expensive and have higher real estate closing costs than co-ops. When you purchase a condo with a mortgage, you must pay a mortgage recording tax and usually need title insurance.

However, these costs are not typically required when you buy a co-op with a mortgage. When you buy a co-op, you are essentially buying shares in the co-op and obtaining a proprietary lease on the apartment. While purchasing title insurance for a co-op is possible, most people choose not to do so.

What closing costs should I budget for my NYC purchase?

  1. Attorney Fees (Condos & Co-ops)
  2. Mansion Tax (Condos & Co-ops)
  3. Title Insurance (Condos only)
  4. Mortgage Record Tax (Condos Only)
  5. Flip Taxes (Co-ops)
  6. Other Fees
  7. New York State & NYC Transfer Taxes (New Development Condos)

Attorney Fees (Condos & Co-ops)

The estimated attorney fees for real estate transactions typically range from $1,500 to $4,000.

The good news is that real estate lawyers usually do not charge by the hour and are only paid when the transaction is closed. Many buyers hesitate to consult a lawyer early on to ask questions about a potential purchase, but they should not worry because they will only have to pay if the deal closes, and there are no extra charges.

In some cases, buyers may also have to pay for the bank, which could cost an additional $1,000.

Mansion Tax (Condos & Co-ops)

The mansion tax in New York City applies to properties valued at $1,000,000 or more. The tax, technically a transfer tax, is paid by the buyer and varies based on the purchase price. The tax rate starts at 1% and increases based on the property, reaching a maximum of 3.9% for properties valued at $25,000,000 or more.

These new rates apply to purchases made after April 1, 2019, and that close after July 1, 2019. The new rate schedule was part of the 2020 budget passed by the New York State Senate and Assembly.

Title Insurance (Condos Only)

Acquiring title insurance when purchasing a condo and obtaining a mortgage is essential. The cost of title insurance can vary, but it generally amounts to around 0.45% of the purchase price.

Although it may be costly, it protects both buyers and lenders against any claims on the property title before the ownership is transferred. Unpaid property taxes and liens on the house are examples of issues that title insurance safeguards you and your lender from.

While it may seem expensive, most mortgage companies require it to lend you money.

Mortgage Recording Tax (Condos Only)

The mortgage recording tax requires condo purchasers to pay 1.8% on mortgages under $500,000 and 1.925% on mortgages above $500,000. This tax is based on the loan amount, not the purchase price.

This means the tax is a significant amount of money paid upfront and will not be recouped. For example, if you were to buy an average apartment in Manhattan for $2,000,000 with 20% down, you would have to pay approximately $30,800 for the mortgage recording tax alone, based on a $1,600,000 loan amount.

Flip Taxes (Co-ops Only)

A flip tax is a transfer fee paid to the co-op corporation during a co-op apartment sale transaction. It is a fee and technically not a “tax,” so it is not deductible as a property tax since a government entity does not levy it.

The amount of the flip tax and who pays it (buyer or seller) varies from co-op to co-op, but this information is generally outlined in the build buildings secretary lease or co-op by-laws.

Don’tDon’tet About Everything Else (Condos & Co-ops)

Remember that when buying a home, additional closing costs must be considered. These may include mortgage fees, appraisals, surveys, move-in deposits, application fees, recording expenses, and incidentals. Some mortgage fees may be negotiable, so don’t hesitate to ask your bank if they can contribute. If you don’t, you’ll never know.

New York State & NYC Transfer Taxes (New Development Condos)

If you’re looking for property in a new development in NYC, you may have to pay transfer taxes.

These taxes can be negotiated with the developer based on the market strength and demand for the property. The New York City Real Property Transfer Tax is 1% if the property value is $500,000 or less and 1.425% for values above that.

Additionally, a New York State transfer tax of 0.40% on the purchase price increases to 0.65% for residential transactions over $3,000,000. These rates are based on the 2020 New York State budget passed on March 31, 2019.

Closing Costs – Condo vs Co-op Comparison in NYC

Attorney FeesYesYes
Mansion TaxYes*Yes*
Title InsuranceYesNo
Mortgage Recording TaxYesNo
State Transfer TaxNo**No
NYC Transfer TaxNo**No
Other Smaller CostsYesYes

* Applicable if price is greater than or equal to $1,000,000 ** Applicable if new development

How can buyers offset some of their closing costs?

Knowing the various costs of buying an apartment in NYC is essential. While most of these costs are unavoidable, potential buyers must educate themselves so they are prepared when it comes time to make an offer. One way to offset some of your closing costs is by taking advantage of a buyer commission rebate.

NestAple offers the most significant rebate in the city. With NestApple, buyers can receive up to 2% cash back, which can help alleviate the financial burden of closing costs.

How to estimate your closing costs

NesApple has developed a closing costs calculator for NYC buyers, allowing you to estimate these expenses quickly. You can also contact Nestapple or your real estate attorney for a more accurate estimate of your closing costs, enabling you to better plan for them within your budget.

Co-op Closing Costs NYC ($1,500,000 purchase price, 25% down payment)

  • Attorney Fees — $4,000
  • NYC Mansion Tax — $15,000
  • Title Insurance — $0
  • Bank Attorney — $1,500
  • Mortgage Recording Tax — $0
  • Other Closing Costs — $4,000
  • NY State Transfer Tax — $0
  • NYC Transfer Tax — $0
  • SelleSeller’srney Fee — $0
  • Total — $14,500

Condo Closing Costs NYC ($2,000,000 purchase price, 25% down payment)

  • Attorney Fees — $4,000
  • NYC Mansion Tax — $25,000
  • Title Insurance — $9,000
  • Bank Attorney — $1,500
  • Mortgage Recording Tax — $28,875
  • Other Closing Costs — $4,000
  • NY State Transfer Tax — $0
  • NYC Transfer Tax — $0
  • Attorney Fee — $0
  • Total — $72,375

Written By: Georges Benoliel

Georges has been working in Wall Street for the last 16 years trading derivatives with hedge funds. He has been an active real estate investor for over a decade. Georges graduated from HEC Business School in Paris and holds a master in Finance from ESADE Barcelona.

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