Buyer Closing Costs on Long Island: Transfer, Mansion and Mortgage Tax

Closing costs are fees paid at the closing of a real estate transaction, and either the buyer or the seller can incur them. In New York, the government-set lines are the transfer tax, the mansion tax and the mortgage recording tax, plus county recording charges. The sections below split them by who pays. The buying hub links the rest of the purchase, and the Nassau County property taxes guide covers the annual bill after closing.

What are the typical closing costs for a buyer in New York State?

The table lists each line and who pays it.

One point equals one percent of the loan principal, and points are prepaid interest charged by the lender as an alternative to a higher rate. Inspection costs are covered in the home inspection guide.

Who pays transfer tax in NY?

New York imposes a real estate transfer tax on conveyances of real property when the consideration exceeds $500, computed at two dollars for each $500 or fractional part of consideration. The statute imposes it on each conveyance at that rate. On a $1,000,000 sale, $1,000,000 ÷ $500 × $2 = $4,000.

The base tax and additional base tax are paid by the seller, and the buyer may not pay them directly or indirectly except as a contract between seller and buyer provides. If the seller does not pay, or is exempt, the buyer must pay the tax. For residential property where the buyer pays the transfer tax under a contract, the amount of that tax is excluded from the calculation subject to tax.

Nassau’s Clerk fee sheet lists the “NYS Tax” at $4 per $1,000 (Rev. 7/2020), which is the state’s $2 per $500 stated per thousand. Read the state transfer tax page for the full rules.

Who pays mansion tax in NY, buyer or seller?

An additional tax, the mansion tax, of 1% of the sale price applies to residences where consideration is $1 million or more. The mansion tax and supplemental tax are paid by the buyer. If the buyer does not pay or is exempt, the seller must pay.

The statute imposes the tax on each conveyance of residential real property when the consideration for the entire conveyance is one million dollars or more. The rate is one percent of the consideration, or part of it, attributable to the residential real property. On a $1,000,000 price, $1,000,000 × 1% = $10,000.

Residential real property includes any premises that is or may be used in whole or in part as a personal residence, such as a one, two or three-family house, an individual condominium unit or a cooperative apartment unit. Under section 1402-A the tax is paid by the grantee. The text is on the New York State Senate site.

Filing the transfer tax return

Outside New York City, Form TP-584 is filed with the county clerk where the property is located. The form and all applicable taxes are due no later than the 15th day after the delivery of the deed or similar document.

If the seller fails to pay the transfer tax, the buyer who then has the duty to pay is jointly and severally liable with the seller. The reverse holds for the mansion tax: when the seller has the duty to pay because the buyer failed to, the tax becomes the joint and several liability of both. When an LLC is the seller or buyer in a deed transfer of a building with up to four family dwelling units, Form TP-584 cannot be accepted without documentation naming all of the LLC’s members, managers and other authorized persons. Nonresident sellers must compute the gain or loss on certain real property, including cooperative units, and pay any estimated personal income tax due.

What counts as the price for the mansion tax

For the mansion tax, consideration is the price actually paid or required to be paid for the real property. It includes the amount of any mortgage, purchase money mortgage, lien or other encumbrance, whether or not the debt is assumed or taken subject to. Fair market value is the amount a willing buyer would pay a willing seller.

After a conveyance of a one, two or three-family house or an individual condominium unit, or of other property where the consideration is under $500,000, the value of any lien remaining on the property is excluded from consideration.

Conveyances the transfer tax does not reach

Conveyances without consideration and outside a sale, including bona fide gifts, are nontaxable. So is a deed of partition. A conveyance by devise, bequest or inheritance does not count as a conveyance for the tax. Conveyances of real property for open space, parks or historic preservation to a not-for-profit tax exempt corporation operated for those purposes are exempt from the mansion tax only.

Mortgage recording tax in Nassau County

New York State imposes a tax on the privilege of recording a mortgage on real property located in the state. The basic tax is 50 cents per $100 of mortgage debt, with a special additional tax of 25 cents per $100. An additional tax is 30 cents per $100 in counties within the Metropolitan Commuter Transportation District. For a one- or two-family home, the first $10,000 of principal debt is deducted in computing the additional tax.

The three state components sum to 50 cents + 25 cents + 30 cents = $1.05 per $100, which matches the 1.05% on Nassau’s Clerk sheet.

The tax is payable at the time of recording to the recording office of the county where the mortgaged property is located. Form MT-15, the Mortgage Recording Tax Return, lists current rates by jurisdiction. The state’s mortgage recording tax page has the details.

Nassau County recording fees

The Nassau County Clerk’s land recording fee sheet, Rev. 7/2020, lists a $40 recording fee, a $300 per block fee and $5 per page, with a $5 endorsement page fee on a deed and on a mortgage. A mortgage affidavit that is part of the mortgage takes the same $5 per page fee. The sheet also lists a $10 residential-only deed notification fee.

The Clerk’s archived schedule, effective January 1, 2013, listed a $150 block fee, so the fee doubled between the two sheets. The 2013 schedule also listed an equalization and assessment fee of $125 residential and $250 commercial. The 2020 sheet itself says to review the Clerk’s website for updates.

Commissions and title services

Brokerage commissions are usually computed as a percentage of the sale price. Title service costs are paid by either party according to the contract. The selling costs guide covers the seller’s side of the closing statement.