NYC Real Property Transfer Tax: A Guide for Sellers
NYC Real Property Transfer Tax: A Guide for Sellers
Selling a property in New York City comes with a unique set of closing costs, and for most sellers, the Real Property Transfer Tax (RPTT) is one of the most significant. Navigating this tax is a critical part of the selling process, and understanding what you owe and why can help you prepare financially and avoid last-minute surprises.
This guide, brought to you by Yeo Real Estate, breaks down everything you need to know about the NYC Real Property Transfer Tax, focusing on the details that matter most to sellers.
What is the NYC Real Property Transfer Tax (RPTT)?
The NYC Real Property Transfer Tax is a tax imposed by the City of New York on the sale or transfer of real property, which includes co-ops, condos, and single-family homes. Unlike the New York State transfer tax, which is also a closing cost for sellers, the RPTT is specifically for properties located within the five boroughs.
Think of it as a fee for the privilege of transferring property ownership. This tax is a major revenue source for the city and is almost always paid by the seller, although in some rare instances (such as with new developments), it may be negotiated for the buyer to pay.
How is the NYC RPTT Calculated for Sellers?
The RPTT rate is a percentage of the sale price. The rate you pay depends on the type of property and the sale price, and it applies to the entire value of the transaction. There are different rates for residential and commercial properties. For sellers of residential properties, the rates are as follows:
Residential RPTT Rates
Sale Price | RPTT Rate |
Up to $500,000 | 1.0% |
Over $500,000 | 1.425% |
It's important to note that these rates apply to the full sale price, not just the portion that falls into a specific bracket. For example, if you sell a property for $450,000, you pay 1% of the total, or $4,500. If you sell it for $600,000, you pay 1.425% of the total, or $8,550.
Is there a "Mansion Tax" for Sellers?
Yes, but it's important to clarify a common misconception. The New York State Mansion Tax is a separate tax paid by the buyer, not the seller. It applies to residential properties that sell for $1 million or more. The rate is a progressive tax that starts at 1% of the sale price and can go up to 4.15%.
While sellers are not responsible for paying the mansion tax, it is a key consideration in the NYC real estate market because it adds a significant cost for buyers, which can influence negotiations and the overall sale price.
What about the New York State Transfer Tax?
In addition to the NYC RPTT, sellers also pay the New York State Real Estate Transfer Tax (NYS RETT). This tax is a flat rate of 0.40% of the sale price. However, there is a "mansion tax" component for the NYS RETT as well. For residential properties that sell for $3 million or more, the NYS RETT rate increases to 0.65% on the entire sale price.
Example Calculation:
Let's assume you're selling a residential condo for $1.5 million in Manhattan.
NYC RPTT: The sale price is over $500,000, so you use the 1.425% rate.
$1,500,000 x 1.425% = $21,375
NYS RETT: The sale price is under $3 million, so you use the 0.40% rate.
$1,500,000 x 0.40% = $6,000
Total Transfer Taxes: Your total combined transfer tax bill is the sum of both.
$21,375 (NYC) + $6,000 (NYS) = $27,375
Common Exemptions to the RPTT
While most property sales are subject to the RPTT, there are a few key exemptions. It's crucial to consult with a legal professional to confirm if your transaction qualifies.
Consideration under $25,000: Transfers where the consideration (the money or value exchanged) is less than $25,000 are exempt from the tax. This is rare for a full property sale but may apply to other types of transfers.
Transfers between close relatives: Certain transfers between close family members, such as a deed transfer between spouses or from a parent to a child, may be exempt.
Certain types of deeds: Transfers via will or executor's deed may be exempt.
Transfers to a tax-exempt organization: If the property is being transferred to a government agency or a qualifying charitable, religious, or educational organization, the transaction may be exempt.
FAQ: Your Top RPTT Questions Answered
Q: Who is responsible for filing the RPTT forms?
A: Typically, your real estate attorney handles the preparation and filing of all necessary transfer tax forms (Form TP-584 for NYS and Form NYC-RPT for NYC) as part of the closing process. They ensure the taxes are paid from the seller's proceeds at the closing.
Q: Does the RPTT apply to co-op sales?
A: Yes. In NYC, the sale of a cooperative apartment is considered a transfer of an interest in real property for tax purposes and is subject to the RPTT.
Q: Are there any other taxes I need to worry about as a seller?
A: Beyond the NYC and NYS transfer taxes, other seller closing costs can include:
Real Estate Commissions: The largest cost, typically 5-6% of the sale price.
Attorney Fees: Usually a flat fee.
Building-specific fees: For co-ops and condos, these can include a flip tax, move-out fees, and other administrative charges.
Tips & Takeaways for NYC Sellers
Budget Accurately: The RPTT is a predictable closing cost. Use the rates provided in this guide to create a realistic budget from the start.
Don't Forget the NYS RETT: Remember to factor in both the NYC and NYS transfer taxes to get a complete picture of your tax liability.
Work with a Professional: Navigating these taxes can be complex. An experienced real estate agent and attorney can help you understand your obligations and ensure a smooth closing.
Consider the Buyer's Costs: While the mansion tax is the buyer's responsibility, understanding it can help you anticipate how a high sale price might impact a potential buyer's budget.
The NYC real estate market can be challenging, but with the right knowledge and a trusted team, you can approach your sale with confidence.
Ready to sell your property in NYC? Let's connect. Our team at Yeo Real Estate has the expertise to guide you through every step of the process, from pricing your home to navigating the complexities of closing costs, ensuring you achieve the best possible outcome.