When you take out a mortgage to buy property in New York City, you pay a mortgage recording tax to record that mortgage in the public record. For 1-to-3 family homes and condos, the rate is 1.8% of the loan amount on loans under $500,000, and 1.925% on loans of $500,000 or more. The lender is required to pay a 0.25% share, so your actual out-of-pocket is slightly lower. Co-op purchases are exempt, because a co-op is shares in a corporation, not real property.
What the mortgage recording tax actually is
This tax has nothing to do with the price of the home, it is a tax on the loan. Every time a mortgage is recorded against a property in NYC, the city and state charge a percentage of the borrowed amount. It is one of the larger closing costs buyers face, and it surprises a lot of first-time buyers because it is separate from everything else they are paying.
The NYC rates
- Loans under $500,000 (1-3 family homes and condos): 1.8% of the loan
- Loans of $500,000 or more (1-3 family homes and condos): 1.925% of the loan
By law the lender pays 0.25% of that, so a buyer’s effective rate is about a quarter percent lower. On a $400,000 mortgage, for example, the tax runs roughly $7,200 before the lender’s share. Rates can change and vary by property type, so confirm the current figure with your closing agent.
Who pays it, and one big exemption
The borrower pays the mortgage recording tax, minus the lender’s small share. The major exception is co-ops: buying a co-op apartment does not trigger this tax at all, because you are buying shares in a corporation rather than real estate. That is one reason closing on a co-op is often cheaper than closing on a condo.
It is not the same as the transfer tax
People mix these up. The transfer tax and the mansion tax are charged on the sale of the property itself. The mortgage recording tax is charged only on the loan you take out to buy it. A cash buyer with no mortgage pays no mortgage recording tax at all, but still owes transfer taxes.
When it is paid
The mortgage recording tax is collected at closing and paid when your mortgage is recorded through the city’s ACRIS system. If you are handling document recording in NYC, the tax is settled as part of getting the mortgage on record. For more on who covers recording costs at closing, see who pays for recording the deed.
Frequently asked questions
Do I pay mortgage recording tax if I pay cash?
No. With no mortgage, there is no mortgage to record, so no mortgage recording tax. You would still owe transfer taxes on the purchase.
Are co-ops really exempt?
Yes. Co-op purchases are financed with a share loan, not a mortgage on real property, so the mortgage recording tax does not apply.
Can I reduce the mortgage recording tax?
In some refinances, a CEMA (consolidation, extension, and modification agreement) can reduce it by taxing only the new money. Ask your attorney or lender whether a CEMA is an option.
This article is general information, not legal or tax advice. Tax rates and rules change, so confirm current figures with the city, your lender, or your closing agent.