Did you know that real estate transfer taxes differ from state to state? Before creating your moving checklist, you should consider the cost of the transfer taxes.
How much do real estate transfer taxes cost in NYC? And how do they work?
This guide will provide you with 6 critical insights on NYC real estate transfer taxes – so you won’t encounter any surprising costs, restrictions, or requirements.
What Is Real Estate Transfer Tax?
If you haven’t heard the term transfer tax in real estate before, perhaps you will have heard it called deed transfer tax or documentary stamp tax.
The tax is charged when you complete the sale of a property, and the deed is transferred under the new owner's name. However, the tax doesn’t just apply to property sales; it can also be applied to inherited and gifted properties.
The terms and tax payments differ from state to state. If you’re transferring property in NYC, this guide is for you. If you are transferring property in another state, you may find the terms slightly different.
6 Insights Into NYC Real Estate Transfer Taxes
What are 6 things you should know before paying transfer taxes in NYC? These insights will prepare you for any challenges or surprises you might have.
1. The Price Of The Property Affects The Rate
When transferring ownership of your property, the price matters. If the property value lies under $25,000, you are exempt from property transfer tax in NYC. Here’s what you need to know if your property lies upwards from this figure:
- Properties under $500,000 will be taxed at a rate of 1%.
- Properties over $500,000 will be taxed at a rate of 1.425%
This applies to type 1 and 2 transfers, which are residential units (condominiums, apartments, houses, and cooperative apartments) where the property is:
- A transfer of economic interest
- A grant, surrender, assignment, or transfer of economic or leasehold interest.
If your transfer does not fit into these categories, then the following rates will apply:
- Properties under $500,000 will be taxed at a rate of 1.425%
- Properties over $500,000 will be taxed at a rate of 2.625%
2. There Are Exemptions For NYC Real Estate Transfers
Not all property transfers are subject to property tax in NYC. If the following apply, you should still file the transfer on an RPPT return:
- The transfer is to or from the United Nations or a global organization involving the US.
- The transfer is to or from a non-profit charitable organization or religious institution.
- The transfer relates to a government body.
- The transfer is outlined in a will and given by an executor, and the property is not to be sold.
- The transfer is due to an identity change or change in ownership status.
3. You Can File Your NYC Real Estate Transfer Online
Filing your RPPT return is simple with the new Automated City Register Information System. The portal will provide instructions for filling out the form and outline the information you must have ready for the process.
You can complete and submit the Real Property Transfer Tax Return form online. Then, you will have the option of registering for the bills associated with the property (water bills, gas, real estate tax, etc.) to be transferred under your name, streamlining your moving administration responsibilities.
4. There Is A Deadline
Once the property transfer is complete, you must submit the transfer forms and make the associated tax payment within 30 days. Remember, the forms should be submitted even if you aren’t subject to property tax due to exemption.
The amount will be subject to interest if you fail to pay within the specified deadline. So, it’s in your best interest to pay on time.
The tax you pay on the property transfer will increase by 5% for every month the filing is delayed and is capped at 25%.
5. You Will Be Charged To File
The cost for filing an RPT is $100, which you must pay upon submission. However, you are exempt from this charge if your transfer is a non-deed transfer.
6. Property tax is different for mansions in NYC.
If a licensed conveyor values your property over $1,000,000, you will be subject to an additional 1% on your property transfer tax payment. This is due to ‘mansion law’.
Final Thoughts
Real estate processes can come with extensive admin responsibilities, and understanding your responsibilities early will help you develop a to-do list for your property sale or transfer.
Since the NYC register information system allows you to transfer the property’s associated bills into your name, you can simultaneously complete two property transfer tasks. Use these property transfer tax insights to guide you through the transfer process and simplify each step.