New York City Real Property Transfer Tax (RPTT) and Mortgage Recording Tax (MRT)
The RPTT and the MRT rates depend on the amount of purchase price and on the type of property transferred.
- Imposed on transfer of residential condominium or cooperative units valued at $25K or more
- Residential property transfers are taxed as follows:
- 1% if the value is $500K or less
- 425% if the value is over $500K
- All other transfers, including transfer of two or more units involve a “bulk rate” of 2.625%
- “Bulk rate” applies even if each unit is conveyed by a separate deed
- Paid as part of closing costs at the sale or transfer of property
- Usually paid by the seller unless otherwise negotiated (in a new construction, often paid by the buyer)
- Imposed on mortgages recorded on property in the five boroughs: Queens, Brooklyn, Manhattan, Bronx and Staten Island
- Mortgages in the amount of less than $500K are taxed at the rate of 2.05%, whether individual or bulk
- Once the amount of mortgage exceeds $500K, the MRT rate differs depending on the type of property transferred:
- Individual unit – NYC Department of Finance applies a rate of 2.175%
- More than one unit– the NYC Department of Finance applies a higher rate of 2.8%
- Paid at the time of closing by buyer
How Buyers and Sellers are Eligible for a Refund of RPTT and MRT
Normally, the NYC Department of Finance subjects bulk sales of residential property to the higher RPTT and MRT commercial rates (“also known as “bulk rate”). However, the Department of Finance will apply the lower residential rates to bulk sales if an argument is properly made that the units were combined or intended for use as one residence.
To determine whether the residential rates should have applied, the Department of Finnance considers the “facts and circumstances” of each transaction:
“The department will examine all of the applicable facts and circumstances in determining whether two or more apartments or units have been physically combined. The issuance of a revised certificate of occupancy, a letter of completion from the Buildings Department or a revised tax lot designation reflecting the joining of two or more apartments or units will be acceptable evidence of such a combination. However, the absence of any of these documents will not be determinative”
Dilendorf Law Firm Helps Obtain Refunds of Real Property Transfer Tax and the Mortgage Recording Tax
While issuance of a revised certificate of occupancy or a revised tax lot designations would be the easiest way to prove a lower rate should apply, those documents are not always obtainable. We had previously successfully obtained refunds for our clients from the NYC Department of Finance without such documentation.
Pursuant to several Letter Rulings, Finance Memorandums and decisions of the Tax Appeals Tribunal, the city can provide a refund in certain cases where the units were not even physically combined at the time of sale but the buyer intended to combine them after the purchase.
Proper application for refund involves review of all pertinent documents and presentation to the NYC Department of Finance and the tax authorities of all documentation, factors and arguments weighing in favor of the lower rate.
Application for refund of the RPTT must be brought within one year of the payment of taxes.
We help our clients obtain a refund from the NYC Department of Finance on a contingency basis – You only pay us if we are successful.