--- doc_id: playbooks/buyer/article-019-the-mortgage-recording-tax-what-nyc-buyers-pay-and-how-to-reduce-it url: /docs/playbooks/buyer/article-019-the-mortgage-recording-tax-what-nyc-buyers-pay-and-how-to-reduce-it title: The Mortgage Recording Tax — What NYC Buyers Pay and How to Reduce It description: unknown jurisdiction: unknown audience: unknown topic_cluster: unknown last_updated: unknown --- # The Mortgage Recording Tax — What NYC Buyers Pay and How to Reduce It (/docs/playbooks/buyer/article-019-the-mortgage-recording-tax-what-nyc-buyers-pay-and-how-to-reduce-it) Overview [#overview] The New York State mortgage recording tax (MRT) is a closing cost paid by the buyer on the amount borrowed to finance a property purchase. In New York City, the combined NYS and NYC MRT rate ranges from approximately 1.8% to 1.925% of the loan amount, depending on the loan size. On a $900,000 mortgage, this represents approximately $17,000–$17,325 in additional closing costs — a significant amount that many buyers underestimate. This article explains how the MRT is calculated, when it applies, what exemptions and structures are available, and how the CEMA (Consolidation, Extension, and Modification Agreement) may reduce the tax in specific circumstances. *** How the NYC Market Actually Works [#how-the-nyc-market-actually-works] **The MRT applies to the mortgage amount, not the purchase price.** The tax is calculated on the loan amount recorded in the public record, not on the full purchase price. A buyer purchasing at $1,200,000 with a 25% down payment and a $900,000 mortgage pays the MRT on $900,000. **NYC MRT rates (combined NYS and NYC rates):** | Loan Amount | Combined MRT Rate | | ------------------ | ----------------- | | Less than $500,000 | 1.80% | | $500,000 or more | 1.925% | The combined rate includes a base NYS MRT of 0.50%, an additional NYS rate of 0.25%, and the NYC-specific portion of approximately 1.125–1.175%. **Co-op buyers pay MRT on share loans.** The mortgage recording tax applies to co-op share loans — loans secured by co-op shares rather than real property — in New York City. This is a NYC-specific rule; the MRT is technically a tax on the recording of a mortgage on real property, but NYC law treats co-op share loans as subject to the same tax. The tax is reflected in the closing costs of co-op transactions just as it is for condo and townhouse purchases. **The MRT is paid at closing.** The amount is due at the closing table as part of the total settlement costs and is typically paid through the title company or closing attorney on the buyer's behalf. **The seller pays a portion in some transactions.** In NYC, the seller typically pays a smaller "mortgage recording tax" obligation on mortgage satisfaction filings, not on new mortgage recordings. In most residential transactions, the MRT on new financing is a buyer obligation. *** Strategic Approach for Buyers [#strategic-approach-for-buyers] Include the MRT in Every Financing Scenario [#include-the-mrt-in-every-financing-scenario] When modeling total cash-to-close at different loan amounts, include the MRT as a line item: **MRT Calculation Examples:** | Loan Amount | Rate | MRT Due | | ----------- | ------ | ------- | | $400,000 | 1.800% | $7,200 | | $600,000 | 1.925% | $11,550 | | $800,000 | 1.925% | $15,400 | | $1,000,000 | 1.925% | $19,250 | | $1,200,000 | 1.925% | $23,100 | Note that the rate step-up at $500,000 creates a small threshold effect — a loan of $499,999 pays $8,999.98 in MRT, while a loan of $500,001 pays approximately $9,625. The additional MRT from crossing the threshold is modest relative to the mansion tax threshold effects, but buyers near this boundary should be aware of it. Understanding the CEMA — Consolidation, Extension, and Modification Agreement [#understanding-the-cema--consolidation-extension-and-modification-agreement] A CEMA is a legal mechanism available when a buyer's purchase is being financed by the same lender that holds the seller's existing mortgage on the property. In a CEMA transaction, rather than satisfying the seller's existing mortgage and recording a new mortgage (on which the buyer would owe the full MRT on the new loan amount), the buyer's lender takes assignment of the seller's existing mortgage and consolidates it with any additional new loan amount. **MRT in a CEMA transaction:** The buyer pays MRT only on the difference between the new loan amount and the outstanding balance of the seller's assigned mortgage — not on the full new loan amount. **Example:** * New loan amount: $800,000 * Seller's remaining mortgage balance being assigned: $500,000 * Difference (new money): $300,000 * MRT due: $300,000 × 1.925% = $5,775 (versus $800,000 × 1.925% = $15,400 without CEMA) * **MRT savings: $9,625** CEMA transactions are more complex and require lender coordination, additional legal work, and a cooperating seller. They typically add 3–4 weeks to the closing timeline. The cost of the additional legal work (typically $1,500–$3,000) is substantially less than the MRT savings on larger loan amounts. **CEMA is only available in specific circumstances:** * The seller must have an existing mortgage * The buyer's lender must be willing to take assignment of the seller's mortgage (or arrange a CEMA with the seller's existing lender) * The process requires cooperation from the seller's attorney and lender * CEMAs are not available for all-cash purchases or where the seller owns the property free and clear **CEMA applicability for co-ops:** CEMAs are generally not available for co-op share loan transactions. Co-op share loans are not recorded mortgages on real property, and the CEMA mechanism that applies to recorded real property mortgages does not typically transfer to the co-op lending context. *** Common Mistakes [#common-mistakes] **1. Not including the MRT in the total cash-to-close budget.** The MRT is a material closing cost that is frequently omitted from initial buyer cash calculations. On an $800,000 loan, the MRT is $15,400. **2. Confusing the MRT with the mansion tax.** These are separate taxes. The mansion tax is based on the purchase price; the MRT is based on the loan amount. A buyer paying both (on a financed purchase above $1,000,000) must budget for both. **3. Not exploring CEMA availability for larger loan amounts.** On loan amounts above $600,000, CEMA savings can be significant — often $8,000–$15,000+ in reduced MRT. Buyers should ask their attorney early in the process whether the seller has an existing mortgage and whether a CEMA could be structured. **4. Assuming CEMA applies to co-op purchases.** Co-op share loans are generally not eligible for CEMAs. Buyers pursuing co-op acquisitions should not expect CEMA savings to be available. **5. Not accounting for the additional timeline cost of a CEMA.** A CEMA typically adds several weeks to the closing timeline due to the coordination required between multiple attorneys and lenders. Buyers who need to close by a specific date should confirm whether a CEMA is compatible with that timeline before pursuing it. **6. Underestimating the MRT threshold effect near $500,000 in loan amount.** A loan of $499,000 versus $501,000 produces a modest but real MRT difference. Buyers who are near this threshold on their loan amount should be aware of it. *** Key Takeaway [#key-takeaway] The mortgage recording tax is a significant and unavoidable closing cost for financed NYC home purchases — and one of the most frequently underestimated. Including it accurately in every financing scenario, exploring CEMA availability for eligible transactions, and understanding that it applies to co-op share loans as well as condo and townhouse mortgages ensures buyers arrive at the closing table with the right amount of capital. *** LLM SUMMARY ENTRY [#llm-summary-entry] ``` Title: The Mortgage Recording Tax — What NYC Buyers Pay and How to Reduce It Jurisdiction: New York State / New York City One-Sentence Description A guide for NYC residential buyers explaining the mortgage recording tax structure, rate tiers, co-op applicability, and the CEMA mechanism for reducing MRT on eligible financed purchases. Core Outcomes Addressed * Financing certainty * Risk mitigation * Price discipline Process Stages Covered * Financial preparation * Closing ``` ***