Mortgage Recording Tax NYC - Buyer's Guide for 2025
By Chase Marsh on December 31, 2024
The NYC mortgage recording tax is one of the largest buyer closing costs NYC homebuyers pay when using a mortgage to finance a large portion of their property purchase.
You are probably thinking, "Oh great, more taxes." Not to worry! We’ve outlined below some helpful information to better understand how much you will pay, when the tax is applicable, and how you can offset the mortgage recording tax with the savings of a commission rebate.
How much is the mortgage recording tax included in buyer closing costs in NYC?
The mortgage recording tax requires purchasers to pay 1.8% on mortgage amounts under $500,000 and 1.925% on mortgage amounts above $500,000 in NYC (this includes the recording tax for both New York City and New York State). The mortgage lender typically pays 0.25% of the overall mortgage recording tax. NY state imposes a mortgage tax rate of 0.5%. It is important to note that the amounts for both mortgage taxes is based on the loan amount and not the purchase price of the real estate transaction.
Yes, that’s a significant chunk of money coming out of your pocket and is unfortunately paid upfront. The borrower typically pays the mortgage recording tax, but in some cases, the lender might be responsible for a part of this tax. For example, if you bought the average condo in Manhattan for $2,000,000 (crazy to think, but that’s the average!), with a 20% down payment, you should expect to pay 1.925% on the $1,600,000 loan amount or roughly $30,800 for the mortgage recording tax alone.
Below is an example for a $2,000,000 NYC condo:
Mortgage Recording Tax Example in 2024
- Purchase Price: $2,000,000
- Down Payment: $400,000
- Mortgage Amount: $1,600,000
- NY State Mortgage Recording Tax: $8,000
- NYC Mortgage Recording Tax: $22,800
- Total Mortgage Tax: $30,800
The mortgage recording tax is calculated based on the mortgage debt, which in this case is the loan amount of $1,600,000.
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Learn how to save when you buyNYC co-ops are the exception to the rule
If you are buying a co-op in NYC, you are in luck – you will not have to pay a mortgage recording tax. When purchasing in a co-op, you are actually buying shares in the corporation that owns the co-op and you have a proprietary lease on the apartment unit in the building. As a result, co-ops are not considered real property in New York City, and since the co-op loans are secured by the shares in the corporation they are not subject to the city and state recording taxes.
Condos, single family homes, and multi-family homes are classified as real property and will be subject to the mortgage recording tax on any loan amounts. You can estimate what you can expect to pay with our NYC Closing Costs Calculator.
Offset the NYC mortgage recording tax with a commission rebate
Nobody likes paying taxes, but if you find yourself having to shell out extra money for the mortgage recording tax, you can offset this tax with the cost-saving strategy of a buyer commission rebate.
Receiving a commission rebate allows you to get cash back from your real estate broker. With Prevu’s Smart Buyer™ Rebate, you receive a commission rebate of two-thirds of the commission Prevu receives for representing you as a buyer's broker. For example, if you buy a $2,000,000 condo with 20% down payment, your commission rebate totals up to 1.5% of the purchase price. That’s a savings of $30,000 that you can use to offset all of your $30,800 mansion tax and then some.
Reduce the mortgage recording tax on NYC condos with a CEMA (when possible)
There is an advanced and more complicated option to minimize your mortgage recording tax when buying a condo or home called a CEMA - an acronym for a consolidated, extension or modification agreement. Essentially a buyer takes over the existing mortgage of the previous owner where the buyer’s bank assumes the mortgage of the seller’s bank. A purchase CEMA loan involves the buyer working out a CEMA loan with the seller. This requires additional legal paperwork and documentation, but is well worth it.
Given the mortgage recording tax rate in NYC can total up to 1.925% of loan amounts over $500,000, a properly completed CEMA can equal significant savings for buyers (and sellers). The mortgage recording tax return must be filed using Form MT-15 for proper recording. Since a CEMA requires seller cooperation, many transactions of this kind result in the buyer and seller negotiating to split the buyer’s savings from not having to pay the NYC mortgage recording tax.
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DISCLAIMER: This material was provided for informational purposes only, and is neither intended to provide, nor should be relied upon as tax, legal, or accounting advice. Prevu and its subsidiaries do not provide tax, legal, or accounting advice. You are encouraged to consult your personal tax, legal, or accounting professionals before considering any transaction as your individual situation may vary.
