New York Real Estate Transfer Tax, Mansion Tax, and Gross Income Tax
This article provides an overview of the different taxes that apply on transfers of real estate. Each deed created by our New York deed preparation service is attorney-designed to meet New York recording requirements and comes with step-by-step instructions for filing with the county clerk or county register.
What Is the New York Real Estate Transfer Tax?
New York charges a real estate transfer tax (RETT) for deeds that transfer real estate sold for more than $500.00.1 New York’s RETT consists of three separate taxes—called base tax, mansion tax, and supplemental tax. A deed may qualify for the base tax but not qualify for the supplemental tax or mansion tax.
Who Is Responsible for Paying New York Real Estate Transfer Tax?
The seller pays the base tax portion of the RETT unless the buyer and seller agree that the buyer will pay.2 The buyer pays the mansion tax and supplemental tax if the deed qualifies for either.3 If the buyer and seller agree for the buyer to pay the base tax, then the amount of base tax paid by the buyer is subtracted from the property’s purchase price when computing the mansion tax and supplemental tax due (if any).4
The buyer or seller responsible for payment must pay the RETT to the recording office—either the county clerk or register of deeds—before the deed may be recorded and not more than 15 days after the deed is delivered.5 Either party may alternatively prepay the tax to the tax commission’s office and present the tax receipt to the recording office at the time of recording.
How Is the Real Estate Transfer Tax Calculated?
New York assesses RETT according to the consideration the buyer provides in exchange for the real estate. For transfer tax purposes, consideration means “the price actually paid or required to be paid… whether or not expressed in the deed.”6
A deed’s consideration is typically the cash purchase price, but consideration can include anything of value the buyer provides in exchange for the real estate. Consideration can also include cancellation of debt or the amount of a mortgage. New York assumes that the value of non-cash consideration is equal to the property’s fair market value unless there is evidence that the consideration has a different value.7
What Is the New York Real Estate Transfer Tax Rate?
New York charges different rates for the three taxes that make up RETT. The effective rates depend on a property’s location and classification and whether the purchase price exceeds certain thresholds.
Base Transfer Tax
New York’s base transfer tax applies to deeds that transfer New York real estate for consideration over $500.00.8 The base transfer tax rate is $2.00 for each $500.00 (or fraction thereof) of consideration. If the deed transfers residential real estate for consideration below $500,000.00, the consideration used to calculate the base transfer tax excludes the value of any lien that remains on the property at the time of transfer.
The base transfer tax rate is adjusted in three scenarios:
- Residential transfer in large city. If the deed transfers residential real estate in a city with a population of over one million and the consideration exceeds $3,000,000.00, the base transfer tax rate increases by $1.25 per $500.00.9
- Non-residential transfer in large city. If the deed transfers non-residential real estate in a city with a population of over one million and the consideration exceeds $2,000,000.00, the base transfer tax rate increases by $1.25 per $500.00.
- Real estate investment trust (REIT). If the deed is a qualifying transfer to a real estate investment trust (REIT) as defined by the Internal Revenue Code, the base transfer tax rate is $1.00 per $500.00.10
An additional transfer tax informally called mansion tax applies to deeds that transfer residential real estate for consideration of $1,000,000.00 or more.11 Mansion tax applies to transfers of residential property throughout the State of New York.
The tax rate for the mansion tax is 1.00% of the consideration. If the deed transfers other property in addition to residential property, the mansion tax rate is 1.00% of the consideration that can be attributed to the residential property.
New York’s supplemental transfer tax applies to deeds that transfer residential property for consideration of $2,000,000.00 or more if the property is in a city with a population over one million residents. The supplemental transfer tax rate starts at 0.25% and progressively increases on the following schedule:
- 0.25% for consideration from $2,000,000.00 – $3,000,000.00.
- 0.5% for consideration from $3,000,000.00 – $5,000,000.00.
- 1.25% for consideration from $5,000,000.00 – $10,000,000.00.
- 2.25% for consideration from $10,000,000.00 – $15,000,000.00.
- 2.50% for consideration from $15,000,000.00 – $20,000,000.00.
- 2.75% for consideration from $20,000,000.00 – $25,000,000.00.
- 2.90% for consideration over $25,000,000.00.12
What Deeds Are Exempt from New York Real Estate Transfer Tax?
New York’s RETT does not apply to certain types of transfers. No transfer tax is required for any of the following recorded instruments:
- Deeds that transfer property for consideration under $500.00;13
- Deeds made pursuant to a devise or bequest in the deceased owner’s will or under intestate succession laws;14
- Deeds to or from the State of New York, United States, or United Nations or any agency thereof;15
- Instruments made to secure a debt;16
- Deeds that confirm, correct, modify, or supplement a prior conveyance for no additional consideration;17
- Deeds that transfer real estate for no consideration, including as a gift;18
- Transfers pursuant to a tax sale;19
- Instruments that reflect a change of identity or ownership form;20
- Deeds of partition;21
- Transfers of property in bankruptcy;22
- Instruments that represent a contract for sale or option to purchase real estate;23 and
- Deeds that transfer real estate in a tax-free area to a business in the START-UP NY program.24
All deeds transferring New York real estate require transfer tax unless the person responsible for paying the tax shows that the deed is exempt.25 The parties to a deed can claim an exemption by completing Part 3 of the Form TP-584 transfer tax affidavit that is submitted with the deed.
Attorney Practice Note: Deeds created to transfer property under a divorce decree or separation agreement require transfer tax in most cases. A deed that releases a former spouse’s rights or interest in real estate has consideration equal to the fair market value of the rights or interest released or transferred unless one or both parties show that the deed has other consideration.
Does New York Require a Return of Other Document for Real Estate Transfer Tax?
A Transfer Tax Affidavit (Form TP-584) must be submitted to the recording officer when filing a deed. Deeds that transfer property in New York City require Form TP-584-NYC. At least one transferor and at least one transferee must sign the completed affidavit.26 A Form TP-584 signed by an agent under power of attorney (POA) must be accompanied by a POA instrument signed by the person on behalf of whom the agent signs.27
The purpose of Form TP-584 is to calculate the amount of transfer tax due or, if the deed is exempt, to identify the reason for the exemption. The recording office may not record a deed until the office has received the completed transfer tax affidavit or a receipt from the tax commissioner showing that the transfer tax has been paid.28
The New York State Department of Taxation and Finance provides instructions for completing the transfer tax affidavit on the department’s website.
Does New York Require Any Additional Forms When Filing Deeds
Along with the Transfer Tax Affidavit, New York requires three additional forms that accompany deeds when filed for recording.
- Cover sheet. Every county in New York has a unique cover sheet required for deeds that transfer real estate in that county. Some counties require the cover sheet to be completed online, and a few recording offices prepare the cover sheet in-house. The county cover sheet is recorded with the deed.
- Real property transfer report (Form RP-5217). A completed real property transfer report (Form RP-5217) provides information about the transfer and the property. The transfer report—which must be signed by the transferor and transferee—requires a filing fee of either $125.00 (if the property is residential) or $250.00 (if the property is non-residential).
- Non-resident estimated income tax payment. Nonresident sellers must complete and submit a Nonresident Real Property Estimated Income Tax Payment Form (Form IT-2663), along with the estimated income tax owed for the sale. Not all transfers require Form IT-2663.
What is New York’s Nonresident Real Property Estimated Income Tax?
New York requires sellers who do not live in New York to pay estimated income tax for the gain from a real estate sale.29 Estimated payments are submitted with Form IT-2663. A transferor who is not required to make an estimated income tax payment must certify that no payment is required. The certification is included within Schedule D of the transfer tax affidavit (Form TP-584).30
A transferor need not make an estimated income tax payment or complete Form IT-2663 in any of the following scenarios:
- The transferor lives in New York.
- The transferor is not an individual, estate, or trust.
- The property qualifies as the transferor’s principal residence under IRS rules.
- The transfer is to or from a government agency.
- The transfer relates to a foreclosure or is a deed in lieu of foreclosure with no additional consideration.31
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- N.Y. Tax § 1402.
- N.Y. Tax §§ 1404(a).
- N.Y. Tax §§ 1402-A(b); 1402-B(a).
- N.Y. Tax § 1404(a).
- N.Y. Tax §§ 1410(a) and (b).
- N.Y. Tax § 1401(d).
- N.Y. Tax § 1404(b).
- N.Y. Tax § 1402(a).
- N.Y. Tax § 1402(a).
- N.Y. Tax § 1402(b).
- N.Y. Tax § 1402-A(a).
- N.Y. Tax §§ 1402-B(a)(1)-(7).
- N.Y. Tax § 1402.
- N.Y. Tax § 1401(e).
- N.Y. Tax § 1405(a).
- N.Y. Tax § 1405(b)(2).
- N.Y. Tax § 1405(b)(3).
- N.Y. Tax § 1405(b)(4).
- N.Y. Tax § 1405(b)(5).
- N.Y. Tax § 1405(b)(6).
- N.Y. Tax § 1405(b)(7).
- N.Y. Tax § 1405(b)(8).
- N.Y. Tax § 1405(b)(9) and (10).
- N.Y. Tax § 1405(b)(11).
- N.Y. Tax § 1404(b).
- N.Y. Tax §§ 1409(a) and (b).
- N.Y. Tax § 1410(a).
- N.Y. Tax § 1409(a)(3).
- N.Y. Tax § 663(a).
- N.Y. Tax § 663(d).
- N.Y. Tax § 663(c).