For buyers in New York, closing costs are an important factor to consider when deciding to purchase a new home.
Closing costs for buyers generally range from 2% to 4% of the home’s purchase price. They’re typically higher for condos over co-ops, new developments over resales, and more expensive apartments over less expensive apartments.
Because closing costs can have a big impact on a buyer’s ability to purchase a new home (and can often be the deciding factor on whether to buy one apartment over another), it’s important to know how much you should expect to pay in closing costs before you decide to make an offer.
Below we outline some of the estimated closing costs New York buyers should expect to pay. One easy way to help pay for these costs is to work with a broker like BRN who will rebate you up to 2% of your new home’s purchase price. Reach out to us and we’ll get you started.
Mansion Tax: 1% to 3.9%
The Mansion Tax applies to real estate purchases above $1 million (so called “mansions,” even if what you’re buying is a one bedroom apartment).
For many years, the tax was a flat 1% on all sales above $1 million. However, in 2019, the New York State Legislature revised the Mansion Tax so that it gradually increases in amount as the purchase price of the home increases.
Current New York Mansion Tax rates are:
1% for purchases between $1,000,000 and $1,999,999
1.25% for purchases between $2,000,000 and $2,999,999
1.5% for purchases between $3,000,000 and $4,999,999
2.25% for purchases between $5,000,000 and $9,999,999
3.25% for purchases between $10,000,000 and $14,999,999
3.5% for purchases between $15,000,000 and $19,999,999
3.75% for purchases between $20,000,000 and $24,999,999
3.9% for purchases above $25,000,000
Mortgage Recording Tax: 1.8% to 1.925%
For buyers purchasing with a mortgage, New York State and City mortgage recording taxes apply. The tax is 1.8% on loans under $500,000 and 1.925% on loans $500,000 and above.
The Mortgage Recording Tax does not apply to co-ops purchases. That’s because co-op purchasers don’t actually buy real property; they buy shares of the corporation that owns the co-op, and the tax only applies to purchases of real property.
Title Insurance: 0.45%
Title insurance protects a buyer against future claims against someone else claiming ownership (or “title”) of the property. In New York, buyers pay 0.45% of their new home’s purchase price for title insurance.
Co-op purchasers don’t pay title insurance for the same reason they don’t pay the Mortgage Recording Tax — they aren’t actually buying real property.
Attorney Fees: $1,500 to $2,500
Buyers can expect to pay their attorney anywhere from $1,500 to $2,500 in fees. You can find attorneys who will charge more or less, but we’ve found that most attorneys price somewhere within this range.
Bank Fees: $2,000 to $3,000
If you’re getting a mortgage on your new home, expect to pay your bank somewhere between $2,000 and $3,000 in fees. These fees include the property’s appraisal and your bank attorney’s fee.
Building Fees: $1,000 to $2,000, depending on the building
Most co-ops and condos in New York charge buyers certain fees as part of the purchase process (including move-in fees, board application fees, etc.).