How to Avoid Paying the NYC Mortgage Recording Tax

By: ROS Team

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The real estate world has a language all its own. It may seem scary at first, but if you do a little research to get a better understanding of what things mean beforehand, the terms and phrases will become less intimidating. If you live in New York City, one of the terms you may run across is NYC mortgage recording tax.

The State of New York imposes a mortgage recording tax on newly purchased property in NYC. This means that you will need to factor in the recording tax when calculating the total amount of the home loan that will be used to finance the property.

We’ll provide an overview of the mortgage tax NYC in this article and look at some frequently asked questions when related to this unique tax.

What is the New York Mortgage Recording Tax?

The New York Mortgage Recording Tax (NYMRT) is a tax imposed by the State of New York on the transfer of real property. The tax is imposed on the recorded mortgage, deed, or other instrument evidencing the transfer of real property.

The NYMRT is imposed on all mortgages recorded in New York City and all counties within the state. There are a few exceptions to this rule, such as for certain government entities and certain types of transfers.

The NYMRT is imposed on both residential and commercial properties. Residential properties are taxed at a rate of 0.50% of the mortgage amount. While commercial properties are taxed at a rate of 1.00% of the mortgage amount.

The NYMRT is used to fund various local government initiatives, such as affordable housing programs and infrastructure projects.

Who Pays the NYC Mortgage Recording Tax

Who Pays the NYC Mortgage Recording Tax?

The mortgage recording tax in New York is a tax levied on the transfer of real property in the city. The tax is calculated as a percentage of the loan amount and is paid by the borrower at the time of closing.

Mortgage recording taxes are paid to the city in order to record the mortgage on the property. The funds generated by the tax are used to support various city services, such as schools and parks. In addition, the tax helps to ensure that lenders are properly compensated for their loans.

As a result, it is important for borrowers to be aware of the mortgage recording tax when taking out a loan to purchase property in NYC.

How Much is Mortgage Recording Tax New York?

The rate depends on the type of property being transferred and ranges from 0.25% to 2.175%. For example, a borrower taking out a loan to purchase a co-op would pay a tax of 1.475%.

How to Avoid Paying the NYC Mortgage Tax?

When investing in real estate, it is important to consider the best ways to make the transaction as affordable as possible. There are a few ways to avoid paying NYC mortgage recording tax, including:

1) Refinance Your Existing Mortgage

 If you refinance your mortgage for an amount that is equal to or less than your current principal balance. You will not be subject to the NYC Mortgage Recording Tax. For example, if you have a $500,000 mortgage balance and you refinance for $475,000, you will not have to pay the tax.

2) Get A Home Equity Loan

Homeowners can take out a home equity loan without incurring the NYC Mortgage Recording Tax as long as the loan is used for home improvements or other qualified expenses.

3) Pay Cash For Your Home

If you have the cash available, you can avoid paying the NYC Mortgage Recording Tax by paying for your home outright. Similarly, if you are selling your home, you can avoid paying the tax by accepting only cash offers.

What is the MT-15 Form in NYC Mortgage Recording Tax?

MT-15 is the form used to pay the NYC Mortgage Recording Tax. The Tax Department, as well as the Recording Officer where the mortgage tax was paid, will audit Form MT-15.

How is the Mortgage Tax NYC Filed?

The tax is computed as a percentage of the entire mortgage loan amount and is paid by the borrower at the time the mortgage is recorded. There are two different tax rates that may apply: a residential rate and a commercial rate.

The residential rate applies to mortgages secured by one- to four-family homes. While the commercial rate applies to all other properties.

In addition, there are certain exemptions that may apply to the tax. Such as loans used to purchase or improve one- to four-family homes or loans made by certain government entities. For more information on the NYC mortgage recording tax, including how to file it, please contact the NYC Department of Finance.

Where is the Mortgage Recording Tax New York Filed?

The mortgage recording tax in NYC is filed with the city’s Department of Finance. So if you are going to file mortgage recording tax from Brooklyn, Manhattan, Bronx, and Queens, you need to visit The New York City Register Office.

Is the Mortgage Tax NYC Deductible?

The tax is deductible for federal income tax purposes but is not deductible for state or local taxes. For loans originated on or after January 1, 2018, the tax is only deductible if the loan is used to purchase a primary residence. Loans used to purchase investment properties are not eligible for the deduction.

For loans originating prior to January 1, 2018, the deduction is available for both primary and investment properties.

Does NYC Mortgage Recording Tax Apply to Co-ops?

There is a lot of confusion surrounding the NYC mortgage recording tax, especially when it comes to co-ops. The main question is whether or not this tax applies to co-ops, and the answer is a bit complicated.

To understand why it’s important to know a bit about how this tax works. In short, the NYC mortgage recording tax is a tax that is levied on certain kinds of mortgages and home equity loans.

When a loan meets the criteria for this tax, the borrower must pay a percentage of the loan amount to the city. The specific rate depends on the loan amount, but it ranges from 1% to 2.8%.

Now, here’s where things get tricky with co-ops. While most mortgages and home equity loans are subject to this tax, there are some exceptions. One of these exceptions is for loans used to purchase cooperative housing units.

So, if you’re taking out a mortgage or home equity loan to purchase a coop in NYC. You may be exempt from paying the recording tax.

However, it’s important to note that this exception only applies to loans used specifically for purchasing cooperative housing units. If you’re taking out a loan for any other purpose (e.g., refinancing your existing mortgage), you will still be required to pay the recording tax.

Final Words

As a homeowner in New York City, it is important to be aware of the mortgage recording tax and how it may impact you. This guide provides an overview of the tax, as well as information on how to file and pay it. We hope that this resource proves helpful for those looking to purchase or refinance a property in NYC.