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.
Related: ACRIS NYC: How to Search Property Records and Record a Deed
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Who pays it, and who quietly helps
The borrower pays the mortgage recording tax. That is the practical answer and the one that shows up on the closing statement.
In many residential transactions the lender pays a small portion of it, which is a statutory allocation rather than a favor, and it appears as a credit rather than as a discount you negotiated. Do not budget around it.
It is a tax on the loan, not on the house
This is the distinction people miss and it changes the arithmetic. The tax is calculated on the amount being borrowed, not the purchase price.
So two buyers purchasing identical apartments pay different amounts depending on how much each is financing. A large down payment reduces this tax. An all cash purchase avoids it entirely, because there is no mortgage to record.
It also means a refinance is taxed, even though nothing is being bought and nobody is moving. The new mortgage is a new instrument being recorded, and that is what triggers it.
The assignment, and why it matters on a refinance
The tool worth knowing about is the assignment of mortgage, commonly handled through a consolidation, extension and modification agreement.
The idea is straightforward. Rather than satisfying the old mortgage and recording an entirely new one, the existing mortgage is assigned to the new lender and modified, so the tax is calculated only on new money rather than on the full balance. On a large refinance where the borrower is not taking significant cash out, the difference is substantial.
It is not automatic and it is not free. The existing lender has to cooperate, there are assignment fees and attorney costs, and some lenders decline. Ask about it early, because raising it a week before closing is usually too late.
Co ops sit outside this
A co op purchase is a transfer of shares in a corporation together with a proprietary lease, not a transfer of real property, and the loan is not a mortgage on real estate. So the mortgage recording tax generally does not apply.
That is one of the genuine financial advantages of a co op and it is rarely explained to first time buyers. Condominiums and houses are taxed. Co ops are structured differently.
Do not confuse it with the transfer taxes
Three different taxes get mixed up constantly.
The mortgage recording tax is on the loan and is customarily the buyer’s cost. The state and city transfer taxes are on the sale itself and are customarily the seller’s. The mansion tax is a separate buyer paid tax on higher value residential purchases.
A purchase with a mortgage can involve all of them, which is how closing costs surprise people who budgeted for one.
Get the numbers before you commit
Ask your lender and your attorney for a written estimate that lists each tax separately with the rate applied, and ask specifically whether an assignment is available on a refinance. A blended closing cost figure is not something you can check.
We are not a lender or a law firm and we do not calculate your tax. What we do is the execution and filing side: notarizing the signing, in person across the five boroughs or online, and handling the recording, with the government fees passed through at cost rather than marked up. A New York notary cannot give legal or tax advice, and this is an area where the difference between a good estimate and a guess is measured in thousands.
The mistake first time buyers make
Budgeting for the down payment and treating closing costs as a rounding error. In New York City they are not. Between the mortgage recording tax, title insurance, the lender fees and the attorney, the amount due at the table on a financed purchase is frequently a five figure sum on top of the deposit.
Ask for the itemized estimate early, while you can still change how much you borrow, rather than three days before closing when the number is fixed and the only remaining option is to find the cash.
See also: business and corporate notary in NYC