Who Pays Mortgage Recording Tax in NYC?

If you’re thinking of buying a property in New York City, you need to consider the mortgage recording tax unless you’re paying cash. According to the New York Department of Taxation and Finance, the state imposes a tax “on the privilege” of recording a mortgage.

In other words, the borrower must pay the vast majority of the recording tax in New York City. Also, borrowers must include the recording tax cost in the total cost of the property. However, the tax could be a sizeable amount, depending on the size of the mortgage. Discover how much the recording tax in New York City costs and how to calculate it.

Calculating the Mortgage Recording Tax Rate

The recording tax rate in New York City is broken down into the state and local portions. Taxes, generally paid by the buyer or borrower, are due when the mortgage is recorded.

Mortgage Recording Tax Rates

Below are the taxes based on various factors, including the amount of the property:

• On residential property worth $500,000 or less, the tax is 2.05%.
• On a property of $500,001 and above, the rate rises to 2.175%.
• In each case, the mortgage lender pays 0.25% of the tax while the borrower pays the rest.

If the property is a one or two-family dwelling, there’s a $30 discount for the borrower. 

Examples of the Mortgage Recording Tax in New York City

Let’s say you purchased a beautiful single-family home for $650,000 in New York City. The total mortgage recording tax equals $14,137.50 ($650,000 * .02175). You also get that generous $30 discount since the home is single-family, and you may qualify for other discounts.

A more modest $250,000 home would cost $5,125.00 ($250,000 * .0205) minus the $30 discount.

The New York City Department of Finance website has a mortgage tax calculator to help you figure out the tax.

Two Ways to Avoid the Mortgage Recording Tax

If you’re refinancing the property, there’s a chance you may not pay new recording taxes, but your lender may charge fees of its own to help you qualify for the exemption (especially if you’re refinancing with a different lender than the holder of the original mortgage). Discuss the option with your mortgage lender to determine if it’s worth the cost.

You can also look into avoiding mortgage recording tax if you assume the mortgage of the previous owner, a procedure called a mortgage assignment or a “Consolidation, Extension or Modification Agreement.” The paperwork involved in this can have significant costs of its own and may not be cheaper than paying the mortgage recording tax, but it’s worth investigating if applicable to your purchase.

Please note that the mortgage recording tax can be added to the cost basis of your property when you sell it, so keep track of how much you paid. 

The Bottom Line

For those looking to buy a property in New York City, be sure to consider the mortgage recording tax. The mortgage loan borrower must pay the vast majority of the recording tax in New York City, which can be costly. The tax represents a percentage of the mortgage loan amount. Before buying a property, be sure to consider all of the add-on costs, including property taxes, mortgage insurance, closing costs, and the mortgage recording tax.