Real estate transfer tax

Tax is computed at a rate of two dollars for each $500, or fractional part thereof, of consideration.

An additional tax of 1% of the sale price (mansion tax) applies to residences where consideration is $1 million or more.

Beginning on July 1, 2019, certain conveyances of real property or interests therein located in New York City (other than conveyances made pursuant to a binding written contract entered into on or before April 1, 2019) are also subject to the following taxes:

• A tax of $1.25 for each $500, or fractional part thereof, when the consideration for the entire conveyance of residential real property is $3 million or more (additional base tax);

• An additional base tax of $1.25 for each $500, or fractional part thereof, when the consideration for the entire conveyance of property other than residential real property is $2 million or more; and

• A supplemental tax on the conveyance of residential real property, or interest therein, when the consideration is $2 million or more. The tax rate is an incremental rate between .25% and 2.9% based on the purchase price. The rates are published in Form TP-584-NYC-I, Instructions for Form TP-584-NYC.

The base tax and additional base tax are paid by the grantor (seller), and such tax shall not be paid directly or indirectly by the grantee (buyer) except as provided in a contract between seller and buyer. However, if the seller doesn't pay the tax, or is exempt from the tax, the buyer must pay the tax.

In the case of the conveyance of residential real property, if the transfer tax is paid by the buyer pursuant to a contract between the buyer and seller, the amount of tax shall be excluded from the calculation subject to tax.

Where the buyer has the duty to pay the transfer tax because the seller has failed to pay, the tax becomes the joint and several liability of the seller and the buyer; provided that in the event of such failure, the buyer shall have a cause of action against the seller for recovery of payment of such tax by the buyer.  

The mansion tax (additional tax) and supplemental tax are paid by the buyer. If the buyer doesn’t pay the tax or is exempt, the seller must pay the tax.

In the case where the seller has the duty to pay the tax because the buyer has failed to pay, the tax becomes the joint and several liability of the seller and buyer.

• For conveyances of real property located outside New York City, file 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, with the county clerk where the property transferred is located. The form and payment of all applicable taxes are due no later than the 15th day after the delivery of the deed or similar legal document.

• File Form TP-584-NYC, Combined Real Estate Transfer Tax Return, Credit Line Mortgage Certificate, and Certification of Exemption from the Payment of Estimated Personal Income Tax for the Conveyance of Real Property Located in New York City, for all real property conveyances in New York City.

• If the deed or document isn't being recorded, file Form TP-584 or TP-584-NYC and pay any tax due directly to the Tax Department no later than the 15th day after the delivery of the document. Mail Form TP-584 or TP-584-NYC with any attachments and payment to the address indicated on the form. If using a private delivery service, refer to Publication 55, Designated Private Delivery Service.

When a limited liability company (LLC) is the seller or buyer in a deed transfer of a building containing up to four family dwelling units, Form TP-584 or Form TP-584-NYC cannot be accepted for filing unless accompanied by documentation that identifies the names and addresses of all members, managers and other authorized persons of the LLC. If any member of the LLC is itself an LLC or other business entity, other than a publicly traded company, a  REIT, a UPREIT, or a mutual fund, the names and addresses of the shareholders, directors, officers, members, managers and/or partners of that LLC or other business entity must also be provided until ultimate ownership by natural persons is disclosed.

The term authorized person means a person, whether or not a member, who is authorized by the operating agreement, or otherwise, to act on behalf of an LLC or foreign LLC.

The term natural person means a human being, as opposed to an artificial person, who is the beneficial owner of the real property. A natural person does not include a corporation or partnership, natural person(s) operating a business under a d/b/a (doing business as), an estate (such as the estate of a bankrupt or deceased person), or a trust.

Example: On September 16, 2019, RRP, LLC, a single-member LLC, is the seller in a deed transfer of a two-family house to an individual. RRP, LLC’s single-member is ABC Partnership. ABC Partnership has four individual partners and one partner, RRP2, LLC, that is a multiple-member LLC. RRP2, LLC has three individual members. Provide documentation for:

• all managers and other authorized persons of RRP, LLC;
• ABC Partnership;
• ABC Partnership’s four individual partners;
• RRP2, LLC;
• RRP2, LLC’s three individual members;
• all officers and directors of ABC Partnership; and
• all officers, directors, and managers of RRP2, LLC.

Nonresidents must compute the gain (or loss) from the sale or transfer of certain real property, including cooperative units, and pay any estimated personal income tax due. Nonresidents who don't qualify under one of the exemptions shown on Form TP-584 or TP-584-NYC, Schedule D must present one of the following forms to the recording officer or directly to the Tax Department at the same time Form TP-584 or TP-584-NYC is filed:

• IT-2663, Nonresident Real Property Estimated Income Tax Payment Form
• IT-2664, Nonresident Cooperative Unit Estimated Income Tax Payment Form