Transfer Tax - Who Pays?
Hi all, I’m buying an apartment and the seller is trying to pass on the NYS and NYC transfer tax to me. I had understood this to be the seller’s responsibility. Is this typical? Should I stand fast and refuse (and risk losing the place), try to negotiate (split the cost?) or just roll over…
Hi all, I’m buying an apartment and the seller is trying to pass on the NYS and NYC transfer tax to me. I had understood this to be the seller’s responsibility. Is this typical? Should I stand fast and refuse (and risk losing the place), try to negotiate (split the cost?) or just roll over because that’s the name of the game? Thanks for your input!
It depends on what’s in the contract of sale. If a price should be a little over $1 million, sometimes the seller will agree to a price just below the million if the buyer pays all the closing costs. Having the price below $1,000,000 avoids the mansion tax. I think that you should be looking at a total cost of acquisition when determining a price. If you made your offer based on the assumption that closing costs would be $X and now they’re $X+transfer tax, you probably made a higher offer than you would have otherwise. If this were a sponsor sale of new construction or co-op/condo conversion then the offering plan would have spelled this out (ours did), if it’s a resale, the seller should have disclosed this expectation earlier rather than later, usually the listing real estate agent will tell you of such things.
The seller should pay… But in my case the bastard refused and I would have lost the place. Filthy lawyer.
I just wound up writing it off as “legal fees”
Just be creative.
Yes, generally the seller should pay transfer taxes, but the custom in NYC is to have the buyer pay when purchasing from a sponsor.
Whether you’re buying from a sponsor or not, in this market, there’s really no reason you should be paying transfer taxes at all unless you’re getting a tremendous deal on the price. If the seller doesn’t want to pay them, then yes you should walk away.
If you are buying from a sponsor, it’s part of negotiations. My sellers wanted to bump up comps as much as possible, so they paid the taxes and I paid a higher price (+ tax – the deduction I’d lost).
I negotiated for a new construction condo over the summer with a sponsor and they wouldn’t budge on covering the transfer tax. At the end, I decided to walk away from it and ended up buying into a pre-war building where the closing costs were significantly lower than what I would have paid for in a new construction condo. However, I know the building has a lot of units in contract, so it must mean that others are willing to pay the tax.
NYC SPORT nailed it. During boom times, new construction or conversions sellers passed it along to the buyers.
EVERYTHING IS NEGOTIABLE THESE DAYS
If you pay the taxes you may get a lower purchase price and if you don’t you will probably pay higher. Bottom line someone is paying it.
I think if you’re buying from any sponsor — new construction or old prewar place — that tax traditionally falls to the buyer. At least it did when I bought a 100 yr old falling down formally-rent-controlled place from a sponsor. But as was said, it’s all part of the negotiation .
Believe nyc is correct. There is a legality to who pays but new construction if memory serves was an odd exception. Your lawyer should know standard and be making sure seller and their lawyer are in adherence.
The tax is technically the obligation of the seller. In new construction, especially the heady days of yore, the sponsor passed them to the buyer. It would be quite unusual for the buyer to pay in a resale.