CEMA Loans in New York: Saving on Mortgage Recording Tax
How a NY CEMA works for refinances and purchases, how much mortgage recording tax it can save, the fees that cut into savings and why co-ops cannot use one.
6 min read · Updated
A CEMA (Consolidation, Extension and Modification Agreement) lets you pay New York mortgage recording tax only on new money, not on the balance of a mortgage that was already taxed. In NYC that can save thousands of dollars on a refinance, and sometimes on a purchase if the seller's lender agrees to assign its loan.
It only works for property with a recorded mortgage: houses, two- and three-family homes, and condos. Co-op share loans are not taxed in the first place, so there is nothing to save.
At a glance
- NYC + NYS rate, loans under $500,000
- 2.05%
- Total of city and state levies
- Rate, residential loans of $500,000+
- 2.175%
- 1-3 family homes and condo units
- Lender-paid share (1-6 unit homes)
- 0.25%
- Special additional tax, Tax Law §253
- What a CEMA taxes
- New money only
- Tax Law §255
- Works for co-ops?
- No
- Co-op loans owe no MRT
Why New York has CEMAs at all
New York taxes the act of recording a mortgage. In New York City the combined state and city tax is 2.05% of the loan when the loan is under $500,000, and 2.175% when a residential loan is $500,000 or more. The NYC Department of Finance's annual report says plainly that in most cases a refinance is taxed too. Without a CEMA, refinancing a $600,000 mortgage means paying the tax on $600,000 again, even though the same debt was taxed when you bought.
Tax Law §255 creates the way out. A supplemental mortgage that does not create “new or further indebtedness” is not taxed. If it does add new debt, tax is due only on the new part. A CEMA is the paperwork that uses this rule: the old mortgage is kept alive, transferred to the new lender, and combined with any new money.
| Loan type | State levies | City levies | Total |
|---|---|---|---|
| Any mortgage under $500,000 | 1.050% | 1.000% | 2.050% |
| Residential, $500,000 or more | 1.050% | 1.125% | 2.175% |
| Commercial, $500,000 or more | 1.050% | 1.750% | 2.800% |
“Residential” here means one-, two- and three-family homes, individual condo units and residential vacant land. On homes with six or fewer units the lender pays the 0.25% special additional tax (loans from individuals and credit unions on those homes are exempt from it), so the borrower's share is usually 1.8% under $500,000 and 1.925% at $500,000 or more. On one- and two-family homes the first $10,000 of the loan is also exempt from the 0.30% MTA portion, which is worth $30.
How a CEMA works, step by step
- 1
Your old lender assigns the existing mortgage
Instead of being paid off and marked satisfied, your current mortgage is assigned (transferred) to the new lender. Your old lender still gets paid in full at closing. - 2
Any new money goes on a separate "gap" mortgage
If the new loan is bigger than the balance being assigned, the difference is secured by a new mortgage. Only this new debt is taxed. - 3
The two are consolidated into one loan
The assigned mortgage and the gap mortgage are combined, the terms are changed to your new rate and term, and you make one monthly payment. - 4
The exemption is claimed at recording
Section 255 requires a sworn statement of the facts supporting the exemption, filed with the recording officer. Your lender’s attorney or title company prepares it.
Worked example: a refinance
You own a condo in Brooklyn. Your mortgage balance is $600,000 and you refinance into a $650,000 loan to take $50,000 out.
| Item | No CEMA | With CEMA |
|---|---|---|
| Amount taxed | $650,000 | $50,000 |
| Total tax at the rate shown | $14,137.50 (2.175%) | $1,025 (2.05%) |
| Lender pays 0.25% special additional tax | −$1,625 | −$125 |
| Borrower pays (approx.) | $12,512.50 | $900 |
| Tax saved before CEMA fees | — | about $11,600 |
The CEMA column applies the under-$500,000 rate to the $50,000 of new money. Ask your title company which rate tier it will apply in your deal; if the $500,000-and-over rate is used, the borrower share would be about $962.50 instead. Either way, the saving is large compared with the fees. Run your own numbers with the mortgage recording tax calculator.
Purchase CEMAs: when you can use one to buy
A purchase CEMA uses the seller's existing mortgage instead of yours. The seller's lender assigns its loan to your lender, you take a gap mortgage for any amount above that balance, and the two are consolidated. You pay mortgage recording tax only on the gap.
Three things have to line up:
- The seller has a mortgage, and its lender agrees to assign it. The seller's lender is still paid off in full, but it has to produce the original note and assignment paperwork. Some lenders are slow or refuse.
- Your lender accepts assigned loans. Not every lender does purchase CEMAs. Ask at pre-approval, not after you sign a contract.
- The seller agrees. The seller has to sign extra documents and may want a share of your savings or reimbursement of their attorney's fees. Put the CEMA terms in the contract of sale.
Who a CEMA suits, and who it does not
| Refinance | Purchase | Co-op | |
|---|---|---|---|
| Mortgage recording tax applies | |||
| Existing recorded mortgage to assign | Yours | Seller’s | |
| Third-party consent needed | Old lender | Seller and seller’s lender | |
| Usual saving | Tax on the old balance | Tax on the seller’s balance | None |
A CEMA is most valuable when:
- The balance being assigned is large (the saving grows with it).
- You are taking little or no cash out (all new money is taxed).
- The property is in NYC or another county with the full additional tax.
It is less useful when your remaining balance is small, so the tax saved barely beats the fees.
Why co-ops cannot use a CEMA
When you buy a co-op you buy shares in a corporation, not real property. Your loan is secured by those shares, not by a recorded mortgage. The Department of Finance confirms that mortgages on individual cooperative apartments do not incur mortgage recording tax. No tax means nothing for a CEMA to save. (The co-op corporation's own building mortgage is a different matter, and that is the board's concern.) For how co-op financing works, read co-op share loans vs mortgages.
The fees that cut into the savings
A CEMA is extra legal work, and lenders and their attorneys charge for it. No law sets these fees, and they vary by lender. Expect some or all of these:
- A CEMA or assignment processing fee charged by your old lender (or the seller's lender).
- Legal fees for the new lender's attorney to draft the assignment, gap mortgage and consolidation agreement.
- Extra recording fees for recording more documents in ACRIS.
- On a purchase, any payment the seller negotiates for cooperating.
Compare these fees with the tax saved on your Loan Estimate. On a large balance the tax saving almost always wins. On a small one it may not.
Questions to ask your lender
- Do you do CEMAs on refinances? On purchases?
- What is the total cost of the CEMA, including your attorney's fee and the old lender's fee?
- How much recording tax will I pay with and without the CEMA? Please show both on the Loan Estimate.
- How long does it add to the closing? Does my rate lock cover that?
- On a purchase: what do you need from the seller's lender, and by when?
- Is the loan program I'm using (fixed, ARM, jumbo) eligible for a CEMA with you?
Related
Re-verified 2026-10-12. Rates from the DOF 2024 MRT report (published Sept 2025) table: 2.05% total for mortgages under $500,000; 2.175% for residential (1-3 family, condo unit) mortgages of $500,000 or more; 2.8% commercial. §253(1-a) confirms the 0.25% special additional tax is paid by the lender (not the mortgagor) on property with six or fewer dwelling units, and is not imposed where the lender is an individual or credit union on such property. §253(2) excludes the first $10,000 from the 0.30% additional tax on 1-2 family homes. §255 confirms supplemental mortgages are taxed only on new or further indebtedness, with a sworn statement filed at recording. DOF report confirms individual co-op apartment loans incur no MRT. Example math re-computed by hand ($14,137.50 / $12,512.50 / $1,025 / $900 / $962.50). Whether the 2.05% or 2.175% tier applies to a gap mortgage is not stated in official sources, so the page tells readers to ask the title company. CEMA fees are not standardized, so no dollar figures are given for them.
Sources
- NY Tax Law §255: supplemental mortgages and additional mortgages · New York State Senate (accessed October 12, 2026)
- NY Tax Law §253: recording tax (basic, additional and special additional tax) · New York State Senate (accessed October 12, 2026)
- NY Tax Law §253-a: New York City mortgage recording tax rates · New York State Senate (accessed October 12, 2026)
- Mortgage Recording Tax Annual Report, Calendar Year 2024 · NYC Department of Finance (accessed October 12, 2026)
General information, not legal, tax or financial advice. Rules change; confirm with the agency or a professional before you act.