New York State and City Real Estate Transfer Taxes: An Overview of a Complex Area

By Rosenthal, Corey; Solomon, Stanley et al. | The CPA Journal, April 2016 | Go to article overview

New York State and City Real Estate Transfer Taxes: An Overview of a Complex Area


Rosenthal, Corey, Solomon, Stanley, Yang, Annie, The CPA Journal


The conveyance of real property or an interest therein, whether commercial or residential, is subject to the New York State and City real estate transfer taxes (RPT). This complex area of tax law has been widely discussed in various articles and publications, but many professionals and taxpayers are unsure of the types of conveyances subject to tax. This article will provide an overview of the nuts and bolts of the New York State and City RPT.

Overview

New York State imposes RPT on each conveyance of real property, or interest therein, when the consideration exceeds $500. The base of the tax, which is measured by consideration received, includes the selling price, mortgages, and other encumbrances that remain a lien on the property, and generally the assumption of any debt or obligation. Conveyance, for RPT purposes, means the transfer or transfers of any interest in real property by sale or exchange. Transfer has a broad definition in the tax law, and it includes an assignment, surrender, mortgage foreclosure, transfer in lieu of foreclosure, option, trust indenture, and conveyance upon liquidation or by a receiver. For New York City, the rules are similar to New York State, except that the RPT is imposed when the consideration exceeds $25,000, rather than $500.

The New York State RPT is to be paid by the grantor, and the return must be filed no later than the 15th day after the delivery of the instrument affecting the conveyance. An extension can usually be obtained through the submission of a written request. In the event the grantor fails to pay the transfer tax, the grantee will be liable for the tax.

The New York City RPT is also paid by the grantor; if the grantor does not pay, the grantee must pay. The RPT must be paid and the return filed within 30 days after the transfer of the property, even if the conveyance is not subject to tax. A 30-day extension will be granted if the grantor submits a written request to New York City.

Computation

As noted, the RPT is measured by consideration. Consideration means the price actually paid or required to be paid for the real property or interest therein, whether or not expressed in the deed, and it includes payment for an option or contract to purchase real property and the amount of any debt assumed by the buyer. It also includes the amount of any mortgage, purchase money mortgage, lien, or other encumbrance on the property, whether or not the underlying indebtedness is assumed. The New York State RPT is computed at the rate of $2 for each $500 of consideration for the transfer. In addition, residential owners should be aware of an additional 1% tax imposed on conveyances of residential property when the consideration is $1 million or more. This is known as the "mansion tax."

For New York City, the tax rate and amount of tax due depends on the type of property involved and the amount of consideration. …

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