New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter IV - Sales And Use And Other Miscellaneous Taxes › Subchapter D - Mortgage Recording Taxes › Part 651 - Credit Allowed For Mortgage Tax Paid To First Purchasers Of Condominium Units › Section 651.2 - Computation of credit

Current through Register Vol. 46, No. 28, July 10, 2024
Real Property Law, § 339ee
The amount of credit as described in section
					 651.1  of this
					 Part, is determined by multiplying the basic tax and, where applicable, the
					 additional tax, the City of New York tax, the City of Yonkers tax and the
					 Broome County tax paid upon the recording of such a construction or blanket
					 mortgage, by the purchaser's pro rata percentage of interest in the common
					 elements of the condominium.
Example 1:
A $1 million construction mortgage on real property located
					 in New York City is recorded on January 1, 1991. The proceeds of the mortgage
					 are applied to the construction of a building, which consists of 10 residential
					 condominium units. Each unit is allocated 10% of the common elements as
					 provided by the condominium declaration. Upon the recording of the construction
					 mortgage $5000 of basic tax, $2500 of additional tax, and $17,500 of City of
					 New York tax was paid.
the first unit in the newly constructed building is sold on
					 August 1, 1991. The purchaser, Mr. Jones, borrows $400,000 from Bank X to
					 finance his purchase, and gives a mortgage to Bank X as security for the amount
					 borrowed. When the $400,000 mortgage is recorded, the taxes due and credit are
					 computed as follows:
Basic tax on $400,000 mortgage
$2,000
Less: Credit allowed against basic tax (10 percent ×
								$5000)
500
Basic tax due
1,500
Additional tax on $400,000 mortgage
$1,000
Less:* Exclusion for first $10,000 of mortgage
								debt
25
Balance
975
Less: Credit allowed against additional tax (10
								percent × 2500)
250
Additional tax due
725
Special additional tax on $400,000 mortgage (no
								credit allowed)
1,000**
City of New York tax on $400,000 mortgage ($1 per
								$100 rate)
4,000
Less: Credit allowed against City of New York tax (10
								percent × 17,500)
1,750
City of New York tax due
2,250
Total mortgage recording taxes due
$5,475
* Since the real property covered by the mortgage is a one
					 family residence, the first $10,000 of principal debt secured by the mortgage
					 is deducted when computing the additional tax. (See section
					 642.2[b] 
					 of this Title.)
** Since the $400,000 mortgage is of real property which is
					 principally improved with a residential dwelling unit, Bank X, the mortgagee,
					 must pay the special additional tax. (See section
					 642.2[b] 
					 of this Title.)
Example 2:
Same facts as in Example 1, except that the first unit in
					 the building is sold on February 1, 1993. Since the first unit is sold more
					 than two years after the construction mortgage was recorded, no credit is
					 allowed.
Example 3:
Same facts as in Example 1, except that the construction
					 mortgage was recorded on May 1, 1989. Since the construction mortgage was
					 recorded prior to July 1, 1989, the credit is allowed regardless of the fact
					 that the first unit of the condominium is sold more than two years after the
					 date that the construction mortgage was recorded.
Also, the City of New York tax payable on the recording of
					 the construction mortgage would be $12,500 based on the rate in effect on May
					 1, 1989, resulting in the credit with respect to such tax being $1,250 (10
					 percent × 12,500).
Footnotes
* Since the real property covered by the mortgage is a one
					 family residence, the first $10,000 of principal debt secured by the mortgage
					 is deducted when computing the additional tax. (See section
					 642.2[b] 
					 of this Title.)
** Since the $400,000 mortgage is of real property which is
					 principally improved with a residential dwelling unit, Bank X, the mortgagee,
					 must pay the special additional tax. (See section
					 642.2[b] 
					 of this Title.)