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.
The NYC Mortgage Recording Tax (MRT), a.k a. Mortgage Tax in NYC, equals 1.8% for loans below $500k and 1.925% for mortgages over $500k. As a result, the MRT is the highest buyer closing cost in NYC. Authorities calculate the Mortgage Recording Tax based on the loan, not the purchase price. We will give you strategies on how to avoid mortgage tax in NYC. However, this NYC Mortgage Recording Tax does not apply to co-op apartments. You can estimate your MRT bill using NestApple’s Interactive Closing Cost Calculator. To be precise and calculate this closing cost, this MRT represents:
- 1.8% for loans under $500,000 and
- 1.925% for loans of $500,000 or more.
- Commercial properties and four or more family houses have a higher Mortgage Recording Tax rate of 2.8%.
You can reduce the amount of the MRT by getting a Purchase CEMA loan from the seller. Fortunately, the MRT does not apply to co-op in NYC, and the tax only applies to mortgages on real property.
Remember, co-ops are not ‘real property.’ It is one reason why closing costs are significantly higher for condos than co-ops in NYC.
It is a transaction tax levied by New York City and State on all new mortgages.
There are MRT in other cities and counties. Nevertheless, the Mortgage Recording Tax in NYC is much higher than in other counties in New York. For example, the total MRT Tax in Westchester County, NY, is only 1.3%.
The MRT in other New York counties is between 1% and 1.25%. In some counties, such as Ulster and Madison, the MRT is as low as 0.75%. You can check these tax tables yourself on Form MT-15.
The bank will typically pay 0.25% of the total MRT. For commercial deals and “hard money” loans, the bank will usually not pay for any Mortgage Recording Tax.
The buyer always pays the MRT in an NYC real estate transaction. This tax applies to actual property purchases, such as condos vs. co-ops. When buying a coop in NYC, there is no MRT, as the loan is not a mortgage. By definition, a mortgage must get secured by real property.
A stock certificate and proprietary lease secure a co-op apartment loan.