Are you selling your New York City home? You might not have considered the cost of transfer taxes, which can account for a sizeable portion of your final closing costs. What are transfer taxes? Transfer taxes are one-time fees levied by government entities when transferring property ownership from one party to another, such as when selling your home. These taxes will vary based on where you live and are typically proportional to your home’s value. This post will explain transfer taxes in New York City, showing you what you can expect, how much you can expect to pay, and other things you should know. The Federal Trade Commission defines transfer taxes as a “state or local tax payable when title to property passes from one owner to another.” Essentially, when you pass the title of your home—your legal right to own the property—to someone else, the government charges a tax on this exchange. Where your property is located will determine what you’ll owe in transfer taxes according to local state, county, or city guidelines. Like other taxes, these are designed to generate revenue. Who pays for the transfer taxes will also depend on where you live. In New York, according to the New York State Department of Taxation and Finance, the seller is responsible for the bill. However, there are some exceptions. If the contract between the seller and the buyer allows for it, the buyer might be able (or required) to pay the tax. Similarly, if the seller cannot or does not pay the transfer tax, the buyer is required to pay. In such cases, the tax becomes a liability of both parties, and as a result, the buyer could be granted cause against the seller and be entitled to payment recovery of the transfer tax from the seller.What are transfer taxes?
Who pays for transfer taxes?
