New York State has recently considered a number of real estate tax changes as a revenue raising mechanism for the Metropolitan Transportation Authority and other budgetary needs. Lawmakers were initially considering a pied-a-terre tax, but have dropped this change for an increase to the New York State Transfer Tax.
Currently, the New York State Transfer Tax (“NYS Transfer Tax”) is calculated at the rate of $2 for every $500 of consideration, or fraction thereof, as a transfer tax paid by sellers of real estate in the State of New York. Further, NY State charges an Additional New York State Transfer Tax (known as the “Mansion Tax”) on purchasers of residential real estate in transactions with a consideration of $1 million or greater. The new law significantly modifies the rates of the NYS Transfer Tax and Mansion Tax.
There are two important exceptions to the tax law change. First, while the NYS Transfer Tax and Mansion Tax are New York State taxes, these tax law changes only apply to transfers in New York City or other cities in the State of New York that have a population of 1 million or more. All other jurisdictions in the State of New York remain unchanged. Second, only transfers made after July 1, 2019 (except for those transactions that were entered into a binding contract of sale prior to April 1, 2019) are subject to the new tax rates.
NYS Transfer Tax:
|Consideration||Residential Matters||Commercial Matters|
|Less than $2 Million||0.4%||0.4%|
|$2 Million to $3 Million||0.4%||0.65%|
|Greater than $3 Million||0.65%||0.65%|
Please note that the rates are rounded. 0.4% rate is $2 for every $500 of consideration (or fraction thereof) and the 0.65% rate is $3.25 for every $500 of consideration (or fraction thereof).
|Less than $1 Million||0%|
|$1 Million or greater, but less than $2 Million||1%|
|$2 Million or greater, but less than $3 Million||1.25%|
|$3 Million or greater, but less than $5 Million||1.5%|
|$5 Million or greater, but less than $10 Million||2.25%|
|$10 Million or greater, but less than $15 Million||3.25%|
|$15 Million or greater, but less than $20 Million||3.5%|
|$20 Million or greater, but less than $25 Million||3.75%|
|Greater than $25 Million||3.9%|
If you have any questions regarding the implications of these tax changes on your real estate matter, or in other issues regarding real estate, please contact Steven Ebert.