New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter IV - Sales And Use And Other Miscellaneous Taxes › Subchapter B - Real Estate Transfer Tax › Part 575 - General Provisions › Section 575.3 - Additional tax

Current through Register Vol. 46, No. 28, July 10, 2024
Tax Law, § 1402-a
(a) In addition to the tax imposed by section 1402 
				  of the Tax Law and described in section
				  575.2  of this
				  Part, a tax is imposed on each conveyance of residential real property or
				  interest therein when the consideration for the entire conveyance is $1,000,000
				  or more. For purposes of this section, residential real property means the
				  following premises that are or may be used in whole or in part as a personal
				  residence at the time of conveyance: a one-, two-, or three-family house; an
				  individual condominium unit; a cooperative apartment unit. When determining the
				  taxable consideration for the purpose of computing the additional tax, no
				  deduction may be made for continuing liens on real property or, in the case of
				  the conveyance of cooperative shares, for any mortgage on the property owned by
				  the cooperative corporation or any lien on the cooperative housing
				  shares.
(b) The rate of such tax is
				  one percent of the consideration or part thereof attributable to the
				  residential real property. The tax must be paid at the same time and in the
				  same manner as the tax imposed by section 1402 
				  of the Tax Law and described in section
				  575.2  of this
				  Part.
Example 1:
A three-family house is sold for $1,200,000. The grantor
					 did not occupy any portion of the house. The grantee is required to pay the
					 additional tax of $12,000 ($1,200,000 × .01). The result would have been the
					 same if the grantor had occupied any portion of the house.
Example 2:
A building containing ten apartments $1,500,000. The
					 grantor used one of the apartments as a personal residence. This conveyance is
					 not subject to the additional tax since the real property conveyed is not a
					 one-, two-, or three-family house, an individual condominium unit or a
					 cooperative apartment unit.
Example 3:
An individual residential condominium unit is sold for
					 $1,000,000. The grantee assumed an existing $400,000 mortgage and paid $600,000
					 in cash. For purposes of the transfer tax imposed by section 1402 
					 of the Tax Law and described at section
					 575.2  of this
					 Part, the grantor must pay tax based upon consideration of $600,000 because the
					 $1,000,000 consideration is reduced by the $400,000 mortgage which remained on
					 the condominium unit. For purposes of the additional tax imposed by section 1402-a  of the Tax Law and described in
					 this section, the grantee must pay tax based upon consideration of $1,000,000
					 since no exclusion is allowed for the $400,000 mortgage.
Example 4:
A three-family house, one-third of which is used for
					 residential purposes and two-thirds of which is used for commercial purposes,
					 is sold for $1,500,000. The commercial portion of the building is valued at
					 $1,000,000 while the residential portion is valued at $500,000. In determining
					 whether or not the consideration for the conveyance is $1,000,000 or more, the
					 consideration for the entire conveyance must be taken into account. In this
					 case, the consideration for the entire conveyance ($1,500,000) exceeds
					 $1,000,000 and, therefore, the conveyance is subject to the additional tax but
					 only on the value of the residential portion ($500,000).
Example 5:
A grantor constructs a two-family house which he then sells
					 for $1,000,000. The grantee intends to convert the house to two offices. The
					 grantee is required to pay the additional tax of $10,000 ($1,000,000 × .01)
					 because the property may be used as residential real property at the time of
					 conveyance. After purchasing the property, the grantee does in fact convert the
					 property to offices. He later sells the property for $1,200,000. No additional
					 tax is due on the sale because the property, at the time of the sale, had been
					 converted to offices and is no longer considered to be residential real
					 property.
(c) Except as
				  otherwise provided in subdivisions (a) and (b) of this section, all of the
				  provisions of this Part relating to or applicable to the administration,
				  collection, determination and distribution of the tax imposed by section 1402 
				  of the Tax Law and described in section
				  575.2  of this
				  Part shall apply to the additional tax imposed by section 1402-a  of the Tax Law and described in
				  this section with such modifications as may be necessary to adopt such language
				  to the additional tax. Such provisions shall apply with the same force and
				  effect as if those provisions had been set forth in this section except to the
				  extent that any provision is either inconsistent with a provision of this
				  section or not relevant to the additional tax authorized by such section 1402-a
				  and described in this section.