Real Estate Transfer Taxes in New York

When you buy a home or other real estate, you must pay certain taxes and closing costs. The real estate transfer tax is one of these costs. Whenever real estate is exchanged, a transfer tax applies for the privilege of transferring real property within the jurisdiction. It varies, depending on the state, county or municipality. This means a fee is paid to the jurisdiction to make the process legal and official. This is how it works in New York.

A financial advisor can help estimate how real estate transfer taxes and other closing costs affect your total purchase or sale budget and how they fit into your broader financial plan.

What Is the Real Estate Transfer Tax Rate in New York?

In New York, the transfer tax is calculated at 2 dollars per $500. For instance, the real estate transfer tax for a $300,000 home would be $1,200.

New York State also has a mansion tax. Properties with sales prices of $1 million or more are subject to an additional 1% real estate transfer tax. That means a home that sells for $1 million has a 1.4% transfer tax.

Transfer tax differs across the U.S. For example, Colorado has a transfer tax rate of 0.01% while those in Pittsburgh, Pennsylvania, face a rate of up to 5%. Some states, such as North Dakota and New Mexico, have no transfer tax at all.

New York State Transfer Tax Rates Example Costs*

*This assumes the NYS real estate transfer tax of $2 per $500 tax rate and 1% mansion tax for properties of $1 million or more.

If you purchase real estate with a price of $2 million or more, you may incur an additional tax of $1.25 for each $500.

Who Pays the Real Estate Transfer Tax?

In New York, the seller of the property is typically the individual responsible for paying the real estate transfer tax. However, if the seller doesn’t pay or is exempt from the tax, the buyer must pay it instead.

The buyer is usually responsible for the 1% additional real estate transfer tax on properties worth $1 million or more. That said, if the buyer is exempt, the seller must pay. Regardless of who pays, New York requires the full tax amount to be paid.

Some states have a set of transfer tax laws that may include exemptions based on an individual’s buying status or income level. In Maryland, for example, certain first-time buyers are exempt from a percentage of the total, or a portion of the property’s sale price may be excluded from taxation. Meanwhile, in the District of Columbia, the tax is split between the seller and the buyer.

Who Is Exempt From Paying New York Property Transfer Tax?

According to New York state tax law, there are certain situations where you are exempt from paying the real estate transfer tax.

• Conveyances that are or were used to secure a debt or other obligation
• Conveyances which, without additional consideration, confirm, correct, modify or supplement a deed previously recorded
• Conveyances of real property without consideration and otherwise than in connection with a sale, including deeds conveying realty as bona fide gifts
• Conveyances that were given in connection with a tax sale
• Conveyances to effectuate a mere change of identity or form of ownership or organization where there is no change in beneficial ownership, other than conveyances to a cooperative housing corporation of the real property comprising the cooperative dwelling or dwellings
• Conveyances consisting of a deed of partition
• Conveyances that were given pursuant to the federal Bankruptcy Act
• Conveyances of real property that consist of the execution of a contract to sell real property without the use or occupancy of such property or the granting of an option to purchase real property without the use or occupancy of such property
• Conveyances with an option or contract to purchase real property with the right to use or occupy such property, where:
  • The consideration is less than $200,000
  • Such property, or at least one unit of a two- or three-family house, was used solely as the grantor’s personal residence
  • The real property consists of a one-, two- or three-family house, an individual residential condominium unit or the sale of stock in a cooperative housing corporation in connection with the grant or transfer of a proprietary leasehold covering an individual residential cooperative unit.
• Conveying real property located in an approved tax-free NY area to businesses in such areas participating in the START-UP NY program.
• Conveying real property on an Indian nation or tribe’s reservation between members of that Indian nation or tribe, a tribally-chartered corporation, or otherwise wholly-owned entity of that same reservation.
• Conveyances of real property, where the entire parcel of real property to be conveyed is the subject of one or more of the following six development restrictions:
  1. Agricultural, conservation, scenic, or an open space easement
  2. Covenants or restrictions prohibiting development
  3. Purchase of development rights agreement
  4. A transfer of development rights agreement, where the property being conveyed has had its development rights removed
  5.  If the real property is subject to the development restriction of an agricultural district or individual commitment, pursuant to article twenty-five-AA of the Agriculture and Markets Law
  6. Any real property subject to any locally adopted land preservation agreement, provided said exemption is included in the local law imposing the tax authorized by this article
• Conveyances of real property, where the property is viable agricultural land as defined in subdivision seven of section three hundred one of the agricultural and markets law and the entire property to be conveyed is to be made subject to one of the development restrictions provided for in subparagraph two of paragraph (j) of this subdivision provided that said development restriction precludes the conversion of the property to a non-agricultural use for at least three years from the date of transfer and said development restriction is evidenced by an easement, agreement, or another suitable instrument which is to be conveyed to the town simultaneously with the conveyance of the real property
• Conveyances of real property for open space, parks, or historic preservation purposes to any not-for-profit tax-exempt corporation operated for conservation, environmental, or historic preservation purposes.
• Conveyances of real property to any tax-exempt corporation, incorporated pursuant to the not-for-profit corporation law or the private housing finance law, where such conveyance is for the purposes of providing affordable housing opportunities within the towns and such corporation is incorporated for the purposes of providing housing opportunities. For the purposes of this paragraph, “affordable housing” shall mean housing opportunities exclusively for town residents of the towns whose income is at or below the median income for the town.
• In the towns of East Hampton, Shelter Island and Southampton, an exemption of two hundred fifty thousand dollars shall be allowed on the consideration of the conveyance of improved real property or an interest therein and an exemption of one hundred thousand dollars shall be allowed on the consideration of the conveyance of unimproved real property.
• In the towns of Riverhead and Southold, an exemption of one hundred fifty thousand dollars shall be allowed on the consideration of the conveyance of improved real property or an interest therein and an exemption of seventy-five thousand dollars shall be allowed on the consideration of the conveyance of unimproved real property.
• Primary residential property purchased by one or more persons, each of whom is a first-time homebuyer shall be exempt from the payment of the real estate transfer tax, in the towns of Southampton, East Hampton, Shelter Island and Southold, provided that:
  1. In the towns of Southampton, East Hampton and Shelter Island, the primary residential property is within one hundred twenty percent of the purchase price limits defined by the state of New York mortgage agency low-interest rate mortgage program in the non-target one family categories for Suffolk county in effect on the contract date for the sale of such property
  2. In the town of Southold, the primary residential property is within sixty percent of the purchase price limits defined by the state of New York mortgage agency low-interest rate mortgage program in the non-target one family categories for Suffolk county in effect on the contract date for the sale of such property
  3. The buyer’s household income does not exceed the income limits defined by the state of New York mortgage agency’s low-interest rate mortgage program in the non-target, one and two-person household category for Suffolk county in effect on the contract date for the sale of such property.

It should be noted that exemptions are granted “only upon application by the owner of such building on a form prescribed by the town. The application shall be filed with the town. If satisfied that the applicant is entitled to an exemption pursuant to this section, the town shall approve the application and the conveyance of such primary residential property shall be exempt from the real estate transfer tax imposed by this article.”

How to File and Pay Your Real Estate Transfer Tax

Also required is Form TP-584, Combined Real Estate Transfer Tax Return, Credit Line Mortgage Certificate and Certification of Exemption from the Payment of Estimated Personal Income Tax. It should be filed with the county clerk where the property is being sold and is due no later than the 15^th day after the delivery of the deed.

Typically, your realtor, lawyer and/or title company or broker will help you pay the necessary closing costs, including this tax. If you’re interested in doing it yourself or are acting as your own agent, you can find more information on the list of NYS real estate transfer tax forms and instructions.

How a Financial Advisor Can Help You Manage Property Taxes

Property taxes often become more complicated once you buy or sell real estate, especially in states like New York, where transfer taxes, local rules and exemptions can vary widely by location. Advice may be useful when you are trying to understand how these taxes fit into the total cost of a purchase or sale, or when you are comparing properties with different tax implications.

The decisions involved are rarely limited to a single tax bill. Buyers and sellers may need to consider who is legally responsible for paying certain taxes, how taxes change at different price thresholds and whether any exemptions apply based on the type of transaction, property use or buyer status. These choices can affect cash needed at closing and overall affordability.

A financial advisor can help by putting property taxes into a broader financial context. This may include reviewing how transfer taxes, property taxes and mortgage costs interact with income, savings and other financial goals. Advisors can also help clarify how one-time taxes compare with ongoing costs when evaluating whether a property makes sense financially.

If you are working through these issues, you may want to ask questions such as how a specific tax will affect the total purchase or sale proceeds, whether exemptions are likely to apply or how property taxes could influence long-term cash flow. These questions often come up alongside other financial decisions, such as budgeting, investing or planning for future moves.

Property tax decisions tend to involve timing, legal requirements and tradeoffs that are not always obvious from the tax rules alone. Having guidance can help clarify those choices, particularly when a real estate transaction is part of a larger financial picture rather than a standalone decision.

Bottom Line

Whenever you buy or sell property in the state of New York, you may be subject to certain transfer taxes. The amount and party responsible will depend on the sales price. The buyer is typically responsible only for the tax portion of the purchase price when the purchase price exceeds $1 million. This can be a large tax expense that should be factored into your buying or selling of property throughout the state.

Tips for Buying Real Estate in New York

• If you want help with this or any other big financial decisions, consulting a financial advisor might be a good idea. They can help you create a bigger-picture financial plan for your long-term financial goals. Finding the right financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Mortgage rates can vary depending on where you’re buying a home. Take a look at New York State’s mortgage rates to see if they’re in the ballpark of what you’re looking to pay.
• If you’re moving from out of state, you might be shocked by the Empire State’s high taxes. Try our New York income tax calculator to see how your paycheck will change once you move.
• Another budget concern is New York property taxes, which are some of the highest in the nation. Before buying a home, you’ll need to make sure you can afford the significant taxes.

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