New York, Don't Forget the Transfer Tax
Richard J. Koreto
2011 drew to a close, New York updated its guidance on real estate
transfer taxation. Unlike many other state
taxes, which are payable on set schedules, transfer taxes
are due shortly after the transaction occurs, so there's
no way to simply download a reminder onto an online calendar.
Also, the rules have some twists, and penalties are severe,
so it plays to review guidance.
state Department of Taxation and Finance has a page dedicated to
estate transfer tax, with links to
additional guidance. Below are some of the key points.
Form: When real estate is transferred, taxpayers must fill out
TP-584. Instructions are available in
a separate document. In general, taxpayers must file Form TP-584
with the recording officer of the county where the real property
being conveyed is located, no later than the 15th day
after the delivery of the instrument effecting the conveyance.
Tax Rate: The transfer tax rate is $2.00 for each $500, or fractional
part thereof, of the consideration.
But those buying upscale will pay more with the so-called
mansion tax: an additional 1 percent of the sales price
beyond the $2/$500 tax. (Despite publicized high-end
purchases in New York City, however, the median price for a house
statewide is only about $212,000, according to preliminary
2012 data from the NYS Association of Realtors.)
Has to Pay: This is tricky. The standard tax is paid by the seller,
if the seller doesn't pay, or is otherwise
exempt, the buyer must pay. For the mansion tax, it's
the reverse: It's paid by the buyer. But if the buyer is exempt,
the seller has to pay.
Exemptions: The state has outlined these in Form TP-584 (Schedule B, Part III).
Exempt entities and
for transfer tax purposes include governmental entities
or conveyances under the federal Bankruptcy Act. Additionally,
the purchase of real property where the consideration
is less than $200,000 and such property was used solely by
the grantor as the grantor’s personal residence
is exempt, but additional conditions in line J apply
Penalties: Any taxpayers who fail to file a return or
who do so late will face a penalty of 10 percent of the
amount of tax due plus an interest penalty of 2 percent
of such amount for each month of delay, up 25 percent
in the aggregate. The department may waive some or all of
the penalty if it finds the delay was due to reasonable
cause and not willful neglect.