4.2 Real Estate Taxes & Transfer Taxes

New York State Transfer Tax

The statewide real estate transfer tax is $2 per $500 of consideration (or any fraction of $500), which equals 0.4%. It is normally paid by the seller (grantor); if the seller is exempt (e.g., a government body), the buyer pays. Conveyances to/from federal, state, and local governments and certain nonprofit transfers are exempt.

State Transfer Tax Worked Examples

Shortcut: $2 per $500 = $4 per $1,000 = 0.4%. To check, multiply the price by 0.004.

NYC Real Property Transfer Tax (RPTT)

Within New York City a separate transfer tax applies on top of the state tax. The break point is $500,000, and the rate jumps for the entire price once crossed (not just the excess).

Like the state tax, NYC RPTT is generally the seller's obligation. On a new-construction or sponsor sale, the contract often shifts both transfer taxes to the buyer — read the rider.

NYC Mansion Tax (Buyer-Paid)

The mansion tax applies to residential purchases of $1,000,000 or more anywhere in New York State, but the progressive add-on rates apply within New York City. It is paid by the buyer and is a cliff tax: the rate applies to the full purchase price, so one extra dollar over a threshold can cost thousands.

Total Closing-Tax Example — $2,000,000 NYC Condo

Local Property Taxes & Exemptions

Property tax is assessed locally: the assessor sets an assessed value (a percentage of market value via the assessment ratio), then the tax rate (often expressed per $1,000 or in mills) is applied. Key New York exemptions:

STAR (School Tax Relief) now arrives for most new homeowners as a check/credit rather than an upfront exemption — a common exam distractor.

Computing a Property Tax Bill

Licensees must be able to walk a buyer through a tax estimate. The chain is: market value → assessed value → taxable value (after exemptions) → tax owed.

Step-by-Step Example

Assume a home with a market value of $400,000 in a town that assesses at a 60% ratio, with a school/county/town combined tax rate of $30 per $1,000 (30 mills), and a Basic STAR reduction of $30,000 off taxable value:

Mill reminder: One mill equals $1 per $1,000 of taxable value (0.1%). A rate of "30 mills" and "$30 per $1,000" are identical. Watch for questions that mix the two notations to confuse you.

Tax Liens, Equalization, and Grievance

Unpaid property taxes become a lien that has priority over a mortgage, even one recorded earlier — a key exception to the usual first-in-time rule, because property tax liens are statutory super-liens. Continued nonpayment can lead to a tax foreclosure or tax-lien sale by the municipality.

Because assessment ratios differ between towns, New York applies an equalization rate so that state aid and county taxes are distributed fairly across jurisdictions that assess at different percentages of market value. An equalization rate of 100 means a town assesses at full market value; 50 means it assesses at half.

If an owner believes their assessment is too high, they may file a grievance with the local Board of Assessment Review on Grievance Day (commonly the fourth Tuesday in May, though dates vary by town). If denied, the owner can pursue Small Claims Assessment Review (SCAR) for residential property or an Article 7 tax certiorari proceeding in court. A successful grievance lowers the assessed value and therefore the tax bill going forward — relevant when advising clients who suspect they are over-assessed relative to comparable homes nearby.