Closing Costs for NYC Home Buyers

Closing Costs are all of the expenses involved in a real estate transaction EXCEPT for the actual cost of the property. It’s important to consider these costs when you are shopping for a home because they can be significant and impact your budget.

Buyers in NYC will have closing costs that can include:

Real Estate Attorney

A Real Estate Attorney experienced in NYC transactions is vital to any purchase. You’re entering into a contract with hundreds of thousands of dollars on the line. Now is not the time to use cousin Larry, the tax attorney in Buffalo, even if your mom thinks he’s great and he’ll do it for free.

Expect Attorney’s fees of $1500-$2500 for a standard transaction and $2500-$4000 for a luxury purchase. For complex transactions, which can include new developments, distressed properties, and properties with title issues, you can expect attorney’s fees to be over $4000.

Mansion Tax

The Mansion Tax is a NY State Tax on all purchases over $1 million. Now we all know you don’t get a mansion in NYC for $1 million, but it is what it is. It is payable by the buyer and is a progressive tax, which means the tax rate increases as the purchase price increases, as you can see in the chart.

Mortgage Recording Tax

A City and State tax payable by buyers using a mortgage. Purchasers of co-ops do NOT have to pay this tax. The tax is calculated on the amount of the mortgage, not the purchase price.

The tax rate is 1.8% on mortgages under $500,000 and 1.925% on mortgages over $500,000. Under certain conditions, you may be able to save some of the mortgage recording tax. Ask your attorney about a purchase CEMA.

Flip Tax

A “Flip Tax” isn’t a true tax, but a fee imposed by a co-op. It could be payable by buyer or seller, depending on co-op rules and the results of negotiations.

The Flip Tax is usually a set dollar amount per share, a percentage of the sales price, or a percentage of the profit from the sale. Cost can vary widely.

Title Insurance

This is insurance to protect the buyer and the mortgage lender in case there is another claim to the property. It is not required for co-op purchases.

The cost of title insurance is approximately 0.45% of the purchase price.

NYS & NYC Transfer Taxes

NYS and NYC each have their own progressive transfer taxes. These are only payable by the buyer in a New Development, and could be negotiable.

In the resale of an existing home, this is paid by the seller.

Other Closing Costs

There are other varying closing costs, mostly imposed by the bank or the co-op. They can include Mortgage Fees, Appraisal Fees, Application Fees, Recording Fees, Bank Attorney Fees, Move In Fees, and more. Some banks have programs that refund some closing costs, especially for first time home buyers. Be sure to ask your lender.

Summary

Co-op Buyers can expect to spend 1-2% of the purchase price on Closing Costs for purchases under $1 million and 2-3% on purchases over $1 million.

Condo Buyers can expect Closing Costs of approximately 2-4% of the purchase price.

New Construction Buyers in NYC can expect to pay 5% or more of the purchase price in Closing Costs.