New York State imposes a mortgage recording tax (MRT) on every mortgage recorded against real property in New York. The tax applies to purchase mortgages, refinances, and home equity loans. It is one of the largest closing cost line items for borrowers in New York and a significant reason why New York has some of the highest closing costs in the country.
New York State MRT Components
The New York State mortgage recording tax consists of multiple components that stack together. There is a basic tax, an additional tax, and a special additional tax, all imposed by the state. The combined state-level tax rate is approximately 1.00% for most residential mortgages. New York City imposes a separate surcharge for properties located within the five boroughs, which can push the total MRT to approximately 1.80% for residential mortgages below $500,000 and higher for those above that threshold in NYC.
Who Pays and How It Is Structured
By convention in New York, the borrower pays the MRT. The seller has no obligation for the mortgage recording tax; it is the borrower's closing cost. The tax is paid at the time the mortgage is recorded with the county clerk. It is typically collected by the title company at closing and remitted to the county. Both the buyer's attorney and the title company should have the MRT included in their closing cost projections.
- ✦State tax: approximately 1.00% on most residential mortgages; exact rate depends on mortgage amount and county
- ✦NYC surcharge: additional amount for properties in the five boroughs; total can reach approximately 1.80% or higher in NYC
- ✦Paid by: borrower, not seller; collected through title at closing
- ✦Co-op exception: cooperative apartment loans are not real property mortgages and are not subject to MRT in the same way
Refinance Considerations
A standard refinance triggers a new MRT because a new mortgage is being recorded. However, if an existing mortgage is modified without being discharged and re-recorded, the MRT may not apply or may apply only to any new money added. The distinction between a mortgage modification and a new mortgage recording is important for refinance cost planning in New York.
Aria can help you estimate total New York closing costs including MRT for any loan amount and property location within the state. Ask at vicariointel.com.
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