In NYC, the "Mansion Tax" applies to any property sale of $1,000,000 or more. It starts at 1% and goes up to 3.9% for properties over $25M.
Understanding NYC Closing Costs
Closing costs in New York City are among the highest in the country due to specific taxes like the Mansion Tax and Mortgage Recording Tax.
For Buyers
Mansion Tax: A progressive tax starting at 1% for homes $1M+.
Mortgage Recording Tax: Approx. 1.8% - 1.925% of loan amount for loans under $500k, higher for above. Co-ops are exempt!
Title Insurance: Approx. 0.4% - 0.5% of purchase price (Condos/Houses only).
For Sellers
NYC & NYS Transfer Taxes: Approx. 1.825% combined.
Broker Commission: Typically 5-6% of the sale price.
Flip Tax: Common in Co-ops, varies by building (often 1-3%).
Understanding NYC Closing Costs
New York City has some of the highest and most complex real estate closing costs in the country. Whether you are buying a coop, condo, or townhouse, being prepared for these fees is essential to avoiding surprises at the closing table.
Buyer Closing Costs in NYC
Buyers in NYC typically pay between 2% and 5% of the purchase price in closing costs. The biggest ticket items include:
Mansion Tax: A progressive tax starting at 1% on homes sold for $1,000,000 or more. It scales up to 3.9% for properties of $25M+. Despite the name, this applies to any property, including small condos, if the price hits the threshold.
Mortgage Recording Tax (MRT): If you are financing, you will pay a tax on the mortgage amount (not the purchase price). For loans under $500k, it's roughly 1.8%. For loans over $500k, it jumps to roughly 1.925%. Note: "Coops" are exempt from MRT because you are buying shares, not real property.
Title Insurance: Protects your ownership rights. This is a one-time fee, typically ~0.45% of the purchase price.
Attorney Fees: In NYC, attorneys are required for closing. Fees range from $2,500 to $5,000+.
Seller Closing Costs in NYC
Sellers often face even higher costs, ranging from 8% to 10% of the sale price!
Broker Commissions: Typically 6%, often split between the buyer's and seller's agents.
NYC & NYS Transfer Taxes: Combined, this is usually 1.825% of the sale price (price > $500k).
New Development Transfer Taxes
If you are buying a New Development (sponsor unit), it is customary in NYC for the BUYER to pay the Transfer Taxes that represent the seller's liability. This adds another ~1.8% to your closing costs, significantly increasing the cash needed to close.
Planning Your Budget?
Don't forget to calculate your monthly carrying costs as well. Use our Mortgage Calculator to estimate your monthly payments after closing.
Frequently Asked Questions
How can I avoid the Mansion Tax?
The Mansion Tax is strict. It kicks in at exactly $1,000,000. Sometimes, negotiating the price to $999,999 can save you $10,000 in taxes. However, the purchase price cannot be artificially lowered by separate agreements for furniture, as this is tax fraud.
Do Coops have lower closing costs?
Yes! Because Coops are technically buying shares in a corporation rather than real property, you do not pay the Mortgage Recording Tax (saving ~1.9%) and usually do not require Title Insurance (saving ~0.5%).
