NYC Mortgage Recording Tax: Rates and How to Reduce It

New York City’s mortgage recording tax is a one-time tax on the amount you borrow: 2.05% of the loan if it’s under $500,000 and 2.175% if it’s $500,000 or more, on a house of one to three families or a condo. In most cases the lender pays 0.25% of that by law, so you usually pay 1.8% or 1.925%, and co-op loans pay nothing because they aren’t mortgages on real property.

The tax is due when the mortgage is recorded with the City Register (or the Richmond County Clerk on Staten Island). Most refinances owe it too. It combines a city tax and a state tax. For your own loan amount, use the mortgage recording tax calculator.

The rate table

For this tax, residential means a one-, two- or three-family house, an individual residential condo unit or residential vacant land. Every other mortgage, including mortgages on apartment buildings, is taxed at the commercial rate.

Like the transfer taxes, the rate applies to the whole loan, not just the amount above $500,000. A $500,000 loan pays 2.175% on all $500,000.

Who pays which part

• The lender pays the 0.25% special additional tax when the property has no more than six dwelling units, each with its own cooking facilities. Tax Law §253 says this part can’t be passed to the borrower, directly or indirectly.
• The borrower pays the rest: 1.8% under $500,000 or 1.925% at $500,000 and up on a home loan.
• Loans from a person or a credit union on property with six or fewer units don’t owe the 0.25% special additional tax at all, so the total is 1.8% or 1.925%, all paid by the borrower.
• 1–2 family homes get a small break: the first $10,000 of the loan is exempt from the 0.3% MTA tax, which saves $30.

Why co-op buyers don’t pay it

A co-op buyer purchases shares in a corporation and gets a proprietary lease. The loan is secured by those shares, not by a recorded mortgage on real property, so there is nothing to record. DOF states it directly: mortgages on individual cooperative apartments do not incur liability under the mortgage recording tax. This is one reason co-op closing costs run lower than condo closing costs at the same price. See co-op share loans vs mortgages.

Worked examples

$500,000 loan on a condo: 2.175% × $500,000 = $10,875. The lender pays 0.25% ($1,250) and you pay 1.925% ($9,625). Borrowing $1 less, $499,999, drops your share to 1.8%, about $9,000, so you save about $625. If you’re near the line, a slightly bigger down payment can pay for itself.

$1,000,000 loan on a condo: 2.175% × $1,000,000 = $21,750. The lender pays $2,500 and you pay $19,250.

$1,000,000 loan on a four-family house: four families isn’t “residential” for this tax, so the commercial 2.8% applies ($28,000). The house still has six or fewer units, so the lender pays the 0.25% ($2,500) and you pay $25,500.

How to reduce it

1. Use a CEMA

A Consolidation, Extension and Modification Agreement (CEMA) lets a lender take over an existing mortgage on which the tax was already paid and combine it with a new loan. Tax Law §255 taxes a supplemental mortgage only on “new or further indebtedness,” so you pay tax only on the new money.

• Refinance: you owe $600,000 and refinance into a new $600,000 loan. With a CEMA, there is no new money, so little or no recording tax. Without one, you’d pay roughly $11,550 (1.925%).
• Purchase: you buy a house and borrow $1,000,000, and the seller’s lender assigns its $600,000 mortgage to your lender. Tax applies to the $400,000 of new money, about $7,200 to $7,700 depending on the rate tier your title company applies, instead of $19,250.

Both lenders must cooperate, and a purchase CEMA needs the seller to agree. The lenders and attorneys charge fees for preparing a CEMA, so compare the fees to the tax saved. CEMAs don’t apply to co-ops, which don’t pay the tax anyway. More in CEMA loans in New York.

2. Watch the $500,000 line

On a home loan, $1 over $499,999 costs you about $625. If you can borrow $499,999 or less, you pay the lower rate on the whole loan.

3. Borrow less

The tax is on the loan, not the price. Every $10,000 less borrowed saves $180 to $192.50 of your share.

4. Buy a co-op

Not a reason on its own, but if you’re choosing between a co-op and a condo, the missing recording tax is a real difference. See co-op vs condo.

How it’s paid

1. 1

   Your Loan Estimate shows it

   Look under “Taxes and other government fees.” Compare it with the table above.
2. 2

   Your title company prepares the filing

   Documents for Manhattan, the Bronx, Brooklyn and Queens are recorded online through ACRIS. Staten Island documents are recorded at the Richmond County Clerk.
3. 3

   You pay at closing

   The tax is collected at closing with your other costs and paid when the mortgage is recorded. Any exemption must be claimed when the documents are recorded.

Add it to the rest of your costs with the NYC closing cost calculator, and read NYC closing costs for buyers.