The purchase price is only one part of an NYC real-estate transaction. Buyers may also pay mansion tax, mortgage recording tax, attorney fees, lender charges, title insurance, building fees, and prepaid expenses. Sellers generally pay brokerage commission, city and state transfer taxes, attorney fees, building charges, and mortgage payoff costs.
The final amount depends on the property and the contract. A financed condo usually costs more to close than a financed co-op, while a residential purchase priced at $1 million or more can trigger mansion tax. Sponsor contracts may also require buyers to cover expenses that resale sellers normally pay.
A useful closing estimate needs five pieces of information: the purchase price, property type, mortgage amount, building fee schedule, and contract terms. A general percentage can help with early planning, but it cannot provide the final number.
Key Takeaways
- Resale buyers often use 1.5% to 4% of the purchase price as an early estimate for closing costs.
- Sellers may use 6% to 10% as a rough planning range, depending largely on brokerage commission and transfer taxes.
- New York’s mansion tax begins when a residential purchase reaches $1 million.
- Financed condo and townhouse buyers generally pay mortgage recording tax. Co-op buyers generally do not.
- NYC residential sellers generally pay city transfer tax of 1% at $500,000 or less and 1.425% above $500,000.
- New-development contracts can shift some customary seller expenses to the buyer.
- Attorneys, lenders, title companies, and managing agents provide the transaction-specific figures.
How Much Are Buyer Closing Costs in NYC?
Resale buyers often budget approximately 1.5% to 4% of the purchase price for closing costs. Some co-op purchases fall below that range, while financed condos, purchases above $1 million, and sponsor sales can cost more. The down payment is separate and should not be included in this percentage.
Consider a buyer purchasing a $1.5 million condo with a $1 million mortgage. That buyer may pay mansion tax, mortgage recording tax, title insurance, lender charges, attorney fees, building fees, and prepaid expenses. A buyer paying the same price for a co-op would generally avoid mortgage recording tax and conventional title insurance. That difference can reach tens of thousands of dollars.
Buyer’s attorney
NYC buyers normally hire a real-estate attorney before signing a contract. The attorney reviews the agreement and investigates the legal and financial condition of the property. For a condo or co-op purchase, that work may include reviewing the offering plan, amendments, building financial statements, board minutes, insurance information, pending litigation, open assessments, liens, building rules, and purchase requirements.
Attorney fees depend on the amount and difficulty of the work. An estate sale, new development, townhouse, trust purchase, or LLC purchase may require more time than a straightforward resale. Buyers should ask what the quoted fee includes because lender work, entity documents, title problems, and extended negotiations may cost more.
Mansion tax
New York’s mansion tax applies when a residential purchase price reaches $1 million. The buyer generally pays it.
Despite its name, the tax applies to qualifying condos, co-ops, townhouses, and other residential properties. A one-bedroom Manhattan apartment can trigger it. No mansion required.
| Residential purchase price | Total mansion-tax rate |
|---|---|
| $1 million to under $2 million | 1.00% |
| $2 million to under $3 million | 1.25% |
| $3 million to under $5 million | 1.50% |
| $5 million to under $10 million | 2.25% |
| $10 million to under $15 million | 3.25% |
| $15 million to under $20 million | 3.50% |
| $20 million to under $25 million | 3.75% |
| $25 million or more | 3.90% |
The rate applies to the entire purchase price. At $999,999, the mansion tax is generally zero. At $1 million, the tax is $10,000. A $1.5 million purchase produces a $15,000 tax, while a $3.5 million purchase produces a $52,500 tax.
The jump at $1 million can affect negotiations. Buyers and sellers working near that threshold should calculate the tax before agreeing on a price.
Mortgage recording tax
New York City charges mortgage recording tax when a mortgage secured by real property is recorded. The tax is calculated from the mortgage amount rather than the purchase price.
For qualifying residential mortgages, the combined New York City and New York State rates are generally 2.05% for a mortgage below $500,000 and 2.175% for a mortgage of $500,000 or more. Institutional lenders commonly pay 0.25% of the tax. When that customary contribution applies, the buyer’s effective share is often 1.8% for a mortgage below $500,000 or 1.925% for a mortgage of $500,000 or more.
The lender and loan structure determine the actual calculation, so buyers should confirm the figure before closing.
Co-op buyers generally avoid this tax. A condo is real property, and its mortgage is recorded against that property. A co-op buyer purchases shares in a corporation and receives a proprietary lease for the apartment. The co-op loan is secured by those shares and lease rather than a mortgage recorded against real property.
Title insurance and title charges
Condo and townhouse buyers normally purchase owner’s title insurance. A lender may also require its own policy. Title insurance protects against certain ownership, lien, and recording problems that existed before the purchase.
The title bill may include searches, policy endorsements, municipal reports, lien checks, deed recording, and survey expenses. The price depends mainly on the purchase price and mortgage amount.
Co-op buyers generally do not purchase conventional title insurance for the apartment. Their attorneys normally order lien and Uniform Commercial Code searches covering the seller, co-op shares, and unit.
Lender charges
A financed purchase can include an application or origination charge, appraisal, credit report, bank attorney fee, underwriting costs, loan points, tax service, flood certification, prepaid interest, and escrow funding for taxes and insurance.
Buyers should review the lender’s Loan Estimate instead of relying on a figure given during an early conversation. Two lenders may advertise the same interest rate but charge different points and fees. The lower advertised rate can become the more expensive loan once every charge is counted.
Inspection and engineering costs
An appraisal protects the lender’s interest. It does not replace an inspection.
Inspections are common for townhouses and small buildings, but condo and co-op buyers may also hire an inspector or engineer when the apartment’s condition, renovation history, or building systems raise concerns. Depending on the property, a buyer may need a general inspector, engineer, plumber, electrician, mold specialist, façade professional, or pest inspector.
The apartment is only part of the purchase. An old boiler, weak reserve fund, damaged façade, or planned elevator replacement can lead to an assessment after the seller has left. The New York Attorney General recommends reviewing the offering plan and investigating the property’s physical condition before closing.
Co-op and condo building fees
Buildings may charge buyers for application processing, credit checks, managing-agent review, move-in coordination, elevator use, recognition agreements, financing review, document preparation, and insurance review. Some buildings also require a move-in deposit.
Certain deposits are refundable. Processing and application fees usually are not. Buyers should request the current fee schedule because charges shown in an old listing or earlier transaction may no longer apply.
Prepaid expenses and adjustments
Some amounts on a closing statement are adjustments rather than service fees. They divide income and property expenses according to the closing date.
Common adjustments include property taxes, condo common charges, co-op maintenance, assessments, rent, security deposits, fuel, and water charges. If the seller has already paid the month’s common charges, for example, the buyer may reimburse the seller for the portion covering the buyer’s ownership period.
Why New-Development Closing Costs Can Be Higher
Buying directly from a sponsor can cost more than purchasing a resale apartment because the sponsor contract may shift customary seller expenses to the buyer. These expenses can include the sponsor’s NYC transfer tax, New York State transfer tax, attorney fee, working-capital contribution, reserve-fund contribution, initial common charges, and building processing costs.
The offering plan and contract determine what the buyer must pay. A sponsor’s sales representative may provide an initial estimate, but the buyer’s attorney should review the actual documents. Verbal statements do not change the written agreement.
At higher prices, transferred seller expenses can add tens of thousands of dollars to the buyer’s cash requirement.
Buyer Example: A $900,000 Resale Co-op
Assume a buyer purchases a resale co-op for $900,000 with a 30% down payment and a $630,000 loan. Because the price is below $1 million, the purchase generally does not trigger mansion tax. The co-op loan also avoids mortgage recording tax, and the buyer does not purchase conventional title insurance for the apartment.
The buyer will still have attorney fees, lender charges, an appraisal, UCC and lien searches, building application expenses, move-in costs, prepaid interest, and closing adjustments.
The co-op may also require a certain amount of money to remain in the buyer’s accounts after closing. This post-closing liquidity requirement may equal several months or years of mortgage and maintenance payments. Having enough cash for the down payment and closing costs does not guarantee that the buyer will satisfy the board.
Buyer Example: A $1.5 Million Resale Condo
Assume a buyer purchases a resale condo for $1.5 million with a $500,000 down payment and a $1 million mortgage.
The mansion tax would generally be $15,000. If the lender pays its customary 0.25% share of mortgage recording tax, the buyer’s remaining portion would often be approximately $19,250. Those two taxes alone would total $34,250.
The buyer may then pay title insurance, title searches, attorney fees, lender charges, an appraisal, building fees, prepaid interest, and tax or common-charge adjustments. The $34,250 figure is therefore not the total closing cost; it covers only the mansion and estimated mortgage taxes in this example.
The lender and attorney should confirm the mortgage-tax calculation for the actual transaction.
How Much Are Seller Closing Costs in NYC?
NYC sellers often use 6% to 10% of the sale price as an early planning range. Brokerage commission is usually the largest expense, but city and state transfer taxes can also be substantial. Attorney fees, building charges, mortgage costs, buyer credits, and closing adjustments reduce the proceeds further.
The useful number for a seller is net proceeds: the sale price minus every commission, tax, payoff, credit, and adjustment. That calculation should be completed before an offer is accepted.
Brokerage commission
Real-estate commission is negotiable. There is no mandatory NYC rate.
The listing agreement should explain the amount paid to the listing brokerage, any arrangement involving a buyer’s representative, when the commission is earned, and when it becomes payable. It should also address what happens if the buyer has no agent or asks the seller to cover a representation cost.
Sellers should read these terms rather than relying on a verbal summary.
NYC Real Property Transfer Tax
NYC generally charges Real Property Transfer Tax on qualifying residential sales over $25,000. The published residential rate is 1% when the sale price is $500,000 or less and 1.425% when the price exceeds $500,000.
The seller normally pays this tax. Once the sale price exceeds $500,000, the 1.425% rate applies to the entire amount.
New York State transfer tax
New York State generally charges a base transfer tax of $2 for each $500 of consideration, which equals 0.4% of the sale price.
Certain NYC residential transfers of $3 million or more are subject to an additional 0.25% state base tax. The combined state seller-side rate on those transactions is generally 0.65%.
The seller normally pays these taxes, although the contract and any applicable exemption can affect responsibility.
Seller’s attorney
The seller’s attorney prepares and negotiates the contract, responds to due-diligence questions, addresses liens or title problems, prepares closing documents, coordinates the mortgage payoff, and handles the closing.
Additional work may be required when a sale involves an estate, trust, divorce, LLC, foreign seller, unpaid lien, tenanted property, lost co-op documents, or mortgage problem. Sellers should ask whether the quoted fee includes payoff coordination and post-closing filings.
Flip tax
A flip tax is a transfer charge created by a co-op or condo building. It is not a government tax.
The charge may be based on the sale price, seller’s profit, number of co-op shares, length of ownership, or a fixed amount. The building documents determine how it is calculated and which party must pay.
The seller often pays the flip tax, but this is not universal. It should be confirmed before the property is listed.
Building and managing-agent charges
The seller may be charged for managing-agent processing, building questionnaires, document preparation, closing statements, move-out coordination, elevator use, waiver preparation, and the transfer of co-op stock and lease documents.
Some move deposits are refundable. Other building expenses reduce the seller’s proceeds permanently.
Mortgage payoff expenses
A seller with an outstanding mortgage must normally pay it off at closing. The payoff may include the remaining principal, interest through the payoff date, lender charges, satisfaction preparation, recording fees, UCC termination for a co-op loan, home-equity line closure, and any applicable prepayment charge.
The balance shown on a monthly statement is not the final payoff amount. The seller’s attorney requests a payoff letter calculated for the expected closing date.
Buyer credits and closing adjustments
A seller may agree to give the buyer a credit for repairs, closing costs, a building assessment, an inspection issue, or damage discovered before closing. That credit reduces the seller’s proceeds and must be structured in a way accepted by the attorneys and lender.
The closing statement may also adjust property taxes, common charges, co-op maintenance, assessments, rent, security deposits, fuel, and water charges. Depending on what has already been paid, these adjustments may increase or reduce the amount the seller receives.
Seller Example: A $1.5 Million Residential Sale
Assume a qualifying NYC residential resale at $1.5 million. The NYC transfer tax at 1.425% would be $21,375, while the New York State base transfer tax at 0.4% would be $6,000. The combined city and state transfer taxes would therefore be $27,375.
If the negotiated total brokerage commission were 5%, the commission would be $75,000. Commission and base transfer taxes would then total $102,375.
The seller would still need to account for attorney fees, building charges, a possible flip tax, mortgage payoff expenses, buyer credits, and closing adjustments. The 5% commission in this example is an assumption, not a required or standard rate.
Seller Example: A $3.5 Million Residential Sale
Assume a qualifying residential sale at $3.5 million. The NYC transfer tax at 1.425% would be $49,875. The New York State base tax at 0.4% would be $14,000, and the additional state tax at 0.25% would be $8,750. The seller’s combined city and state transfer taxes would therefore be $72,625.
The buyer’s mansion tax is separate. At a $3.5 million purchase price, the applicable buyer rate would generally be 1.5%, producing a tax of $52,500.
Buyer and seller transfer taxes on the same transaction would total $125,125 before brokerage, legal, title, lender, building, and mortgage expenses are counted.
Co-op Closing Costs vs. Condo Closing Costs
The ownership structure creates the largest difference for buyers. A condo is real property, so a financed condo purchase generally involves a recorded mortgage, mortgage recording tax, title insurance, and deed-related expenses. A co-op buyer purchases corporate shares and receives a proprietary lease, so the transaction generally avoids mortgage recording tax and conventional title insurance.
| Cost | Co-op buyer | Condo buyer |
| Mansion tax at $1 million or more | Generally applies | Generally applies |
| Mortgage recording tax | Generally does not apply | Generally applies when financed |
| Conventional title insurance | Generally not required | Usually required |
| UCC and lien searches | Common | Different title searches apply |
| Building application fees | Common | Common |
| Move-in charges | Possible | Possible |
Co-op closing costs are often lower, especially for financed purchases. That does not mean a co-op buyer needs less cash overall. Co-op boards may demand a larger down payment and substantial post-closing liquidity.
Cash Needed to Close Is Different From Closing Costs
Buyers should calculate four separate amounts: the down payment, closing costs, prepaid or escrowed expenses, and the cash reserves required after closing.
A buyer may have enough money for a 25% down payment and estimated closing costs but still fail a co-op’s financial review. If the board requires two years of mortgage and maintenance payments to remain liquid after closing, those reserves cannot be used to complete the purchase.
Calculate all four amounts before focusing on apartments.
How Buyers Should Prepare
Before making an offer, buyers should request an estimate based on the expected price, property type, resale or sponsor status, down payment, mortgage amount, mansion-tax bracket, current building fees, attorney quote, and lender estimate.
Keep additional cash available because closing dates, tax adjustments, lender figures, and building charges can change. Buyers should also avoid opening new credit accounts, moving large amounts without documentation, or changing employment during the loan process without first speaking to the lender.
How Sellers Should Calculate Net Proceeds
A seller should begin with the expected sale price and subtract brokerage commission, city and state transfer taxes, attorney fees, flip tax, building charges, mortgage payoff, home-equity loans, buyer credits, unpaid assessments, and closing adjustments.
Run the calculation at several possible sale prices. A seller expecting $1.6 million should also see the estimated proceeds at $1.5 million and $1.4 million. Less cheerful, perhaps. Much more useful when an actual offer arrives.
Who Calculates the Final Costs?
Several professionals contribute to the final figures. The attorney prepares or reviews the legal closing statement and contract obligations. The lender supplies loan charges, prepaid interest, escrow figures, and the Closing Disclosure. The title company calculates title and recording expenses, while the managing agent supplies building fees and adjustments.
A tax adviser addresses the seller’s or buyer’s personal tax consequences. The broker can prepare an early transaction estimate and explain customary costs, but should not replace an attorney, lender, or accountant.
Frequently Asked Questions
How much are buyer closing costs in NYC?
Resale buyers often use 1.5% to 4% of the purchase price as an early estimate. Financed condos, purchases of $1 million or more, and new developments may cost more. The down payment is separate.
How much are seller closing costs in NYC?
Sellers often use 6% to 10% as a rough planning range. Brokerage commission, transfer taxes, attorney fees, flip tax, building charges, mortgage expenses, and buyer credits determine the final amount.
Who pays mansion tax in New York?
The buyer generally pays mansion tax on qualifying residential purchases of $1 million or more. The tax is calculated from the full purchase price.
Do co-op buyers pay mortgage recording tax?
Co-op buyers generally do not pay mortgage recording tax because their loans are secured by co-op shares and a proprietary lease rather than a mortgage recorded against real property.
What is the NYC residential seller transfer-tax rate?
NYC generally charges 1% when the sale price is $500,000 or less and 1.425% when the price exceeds $500,000.
What is the New York State transfer-tax rate?
The state base rate is generally 0.4%. Certain NYC residential transfers of $3 million or more face an additional 0.25% state base tax.
Is a flip tax paid to New York City?
No. A flip tax is a transfer charge imposed under a building’s governing documents. It is commonly associated with co-ops, although some condos also impose transfer charges.
Why do new developments have higher closing costs?
The sponsor contract may require the buyer to pay the sponsor’s transfer taxes, attorney fee, reserve contribution, working capital, and other building expenses.
Can closing costs be negotiated?
Government tax rates are fixed. Brokerage compensation, professional fees, seller credits, and responsibility for certain contract expenses may be negotiable.
When will I receive the final amount?
The estimate becomes more precise after the contract is signed, financing is approved, title work is completed, and the building provides its final charges. The attorneys prepare or review the final closing statement.
Review the Costs Before Signing
Buyers should understand the cash required before signing a contract, while sellers should calculate their likely net proceeds before accepting an offer. Early estimates will change, but they can still prevent an expensive surprise late in the transaction.
Jonathan Maimran has more than 20 years of experience with Manhattan residential, commercial, and investment property. Schedule a call to discuss the proposed transaction, likely expenses, building requirements, and the professionals needed to complete the closing.
This article provides general information. It does not constitute legal, tax, lending, or accounting advice. Taxes, fees, exemptions, and contract terms may change. Obtain transaction-specific figures from a New York attorney, lender, title professional, managing agent, and tax adviser.
Sources
- New York State Department of Taxation and Finance: Real Estate Transfer Tax
- New York State Department of Taxation and Finance: Form TP-584-NYC Instructions
- NYC Department of Finance: Mortgage Recording Tax
- NYC311: Real Property Transfer Tax Rates
- New York Attorney General: Before You Buy a Co-op or Condo
- New York Attorney General: Cooperatives and Co-op Ownership
Tax rates, exemptions, professional fees, and contract terms can change. Check the linked government pages and obtain transaction-specific advice before relying on any estimate.