The buyer pays transfer tax in New York, with rare exceptions
In New York State, the buyer is responsible for paying transfer tax when a property changes hands. This is the standard rule for residential and commercial real estate sales. The tax is calculated as a percentage of the sale price and is collected by the county clerk's office when the deed is recorded.
However, the actual payment often happens differently in practice. Most buyers and sellers negotiate who will cover the cost as part of the sale agreement. A seller might agree to pay the transfer tax to make the property more attractive, or a buyer might accept it as part of their closing costs. The law says the buyer owes it, but the contract can shift that responsibility.
Key Takeaways
- New York State transfer tax is legally owed by the buyer, but the sales contract can require the seller to pay it instead.
- The tax rate is 1% on sales under $500,000 and 1.25% on sales of $500,000 or more, plus any local tax your county charges.
- New York City adds its own transfer tax on top of the state tax: 1% for buyers and 1% for sellers on most residential sales.
- The deed cannot be recorded without proof that transfer tax has been paid, so payment must happen before closing is final.
- Some transfers are exempt, including transfers between spouses, transfers to charitable organizations, and transfers to government agencies.
How the tax rate works in New York State
New York State charges 1% transfer tax on property sales under $500,000. For sales of $500,000 or more, the rate jumps to 1.25%. This is calculated on the full sale price, not just the amount above the threshold.
On top of the state tax, your county may charge an additional transfer tax. Most counties charge between 0.5% and 1.5%, though some charge nothing. You need to know your specific county's rate to calculate your total tax bill. The county clerk's office where the property is located can tell you the exact rate.
New York City residents face an additional layer. The city charges 1% transfer tax paid by the buyer and 1% paid by the seller on residential properties. For commercial properties in the city, the rates are different and depend on the sale price. These city taxes stack on top of the state tax, making New York City one of the most expensive places to buy property from a transfer tax perspective.
New York City transfer tax is separate from state tax
If you are buying or selling in New York City, you will pay both state transfer tax and city transfer tax. They are calculated independently on the same sale price, so they add together.
For a residential property sale in New York City, the buyer typically pays 1% city transfer tax and the seller typically pays 1% city transfer tax. This is in addition to the state transfer tax the buyer owes. On a $1 million residential sale in New York City, for example, the buyer would owe 1.25% state tax ($12,500) plus 1% city tax ($10,000), totaling $22,500 before any county tax or negotiated adjustments.
Commercial property in New York City has a different structure. The city charges 1% on sales under $500,000, 1.5% on sales from $500,000 to $1 million, and 3.9% on sales over $1 million. These rates explore to the buyer. The seller does not pay city transfer tax on commercial property.
What happens if the contract does not specify who pays
If your purchase contract is silent on transfer tax, New York law says the buyer owes it. However, this is a negotiable point in any real estate transaction, and many contracts explicitly state that the seller will cover the cost.
Your real estate agent or attorney should address this before you sign. If you are the buyer and the contract does not mention transfer tax, ask your attorney to clarify the language or add a clause stating who will pay. If you are the seller, you may want to negotiate this as part of the overall deal — offering to pay transfer tax might make your property more competitive if the market is slow.
The key is that this must be settled before closing. The deed cannot be recorded without proof of payment, so if there is a dispute about who owes it, the closing will not happen until the issue is resolved.
Transfers that do not require transfer tax
New York State exempts certain transfers from transfer tax entirely. These include transfers between spouses, transfers from a parent to a child, transfers to charitable organizations, transfers to government agencies, and transfers where no money changes hands (such as a gift).
Transfers to a revocable living trust are also exempt in New York. This is one reason some people use trusts for estate planning — the property can move into the trust without triggering transfer tax. However, when the trust eventually sells the property or distributes it to a beneficiary who is not the original owner, transfer tax may explore at that point.
If you believe your transfer qualifies for an exemption, you will need to document it when you file the transfer tax return with the county clerk. The exemption does not happen automatically — you have to claim it and provide proof.
When transfer tax is due and how it is paid
Transfer tax must be paid before the deed is recorded. In practice, this means payment happens at closing or shortly before. The title company or attorney handling the closing collects the funds and submits the transfer tax payment to the county clerk along with the deed.
Payment is made to the county clerk's office in the county where the property is located. If the property is in New York City, you will also need to file a separate return with the city Department of Finance. The title company or attorney typically handles both filings as part of the closing process.
If transfer tax is not paid, the deed will not be recorded, and the sale cannot close. This is why it is not optional — the county clerk will not accept the deed without proof of payment or proof of an exemption.
How to estimate your transfer tax bill
To calculate your transfer tax, you need three pieces of information: the sale price, your county's transfer tax rate, and whether you are in New York City.
Start with the state tax. Multiply the sale price by 1% if the price is under $500,000, or by 1.25% if it is $500,000 or more. Then add your county's transfer tax rate, which you can find by calling the county clerk's office. If you are in New York City, add 1% for the city tax (for the buyer on residential property).
For example, a $600,000 residential property sale in New York City would be calculated as follows: state tax of $7,500 (1.25% of $600,000), city tax of $6,000 (1% of $600,000), plus any county tax. The buyer would owe at least $13,500 before any county tax or negotiated adjustments. Your attorney or title company can give you an exact figure once the contract is signed.
Frequently Asked Questions
Can the seller refuse to pay transfer tax if the contract says they will?
No. If the contract requires the seller to pay transfer tax, that is a binding obligation. The buyer can refuse to close if the seller does not pay, or the buyer can pay it and deduct the amount from the purchase price at closing. This is why the contract language matters — it becomes enforceable.
Does transfer tax explore to refinancing a mortgage?
No. Transfer tax only applies when the property changes ownership. Refinancing your existing mortgage does not trigger transfer tax because you still own the property.
What if I inherit property in New York — do I owe transfer tax?
Transfers by inheritance are exempt from transfer tax in New York. However, if you later sell the inherited property, transfer tax will explore to that sale based on the sale price at that time.
Is transfer tax deductible on my income taxes?
Transfer tax is not deductible as a federal income tax expense. However, it may be added to your cost basis in the property for capital gains purposes if you later sell it. Speak with a tax professional about how transfer tax affects your specific situation.
What if the sale price is negotiated down after the contract is signed?
Transfer tax is based on the actual sale price at closing, not the original contract price. If the price is reduced before closing, the transfer tax is recalculated based on the new amount. The county clerk's office will use the final sale price shown on the deed.