Closing costs when you buy in New York City and the Hamptons

Who pays what

In a resale, New York splits the taxes roughly by who is giving and who is getting. The buyer pays the taxes tied to buying and borrowing: the mansion tax (at $1 million and above), the mortgage recording tax on the loan, and, in the Hamptons, the Peconic Bay tax. The seller pays the transfer taxes: New York State's and, in the city, New York City's.

The law fixes some of this and custom fixes the rest. New York State says its transfer tax is paid by the seller and the mansion tax by the buyer, and that if the buyer doesn't pay the mansion tax the seller must (NYS Department of Taxation and Finance). The city's own transfer tax page doesn't name a payer: both sides sign the return, and in a resale the seller customarily pays it (NYC Department of Finance). A contract can move any of these, and a new development usually does (see below).

Beyond taxes, the buyer usually pays their own attorney, the lender's fees and attorney, title insurance (not for a co-op), building fees and escrow. The seller usually pays their broker and, in many co-ops, the flip tax.

The mansion tax

Anywhere in New York State, a buyer of a home for $1 million or more pays 1% of the whole price. The home can be a house of up to three families, a condo unit or a co-op apartment; the state's definition of residential property names all of them (NYS DTF).

In New York City a supplemental tax is added from $2 million, also paid by the buyer (Tax Law §1402-b). Together they give these rates, each charged on the full price, not just the part above the threshold:

Because the rate applies to the whole price, the thresholds are cliffs. At $999,999 there is no mansion tax; at $1,000,000 it is $10,000. In the city, a $2,000,000 home costs $25,000 in mansion tax, while one at $1,999,999 costs $20,000. Outside the city, including the Hamptons, the rate stays at 1% however high the price goes.

Mortgage recording tax

If you borrow against a house or condo, the mortgage is taxed when it is recorded. In New York City the combined state and city rate on one- to three-family homes and condo units is 2.05% for loans under $500,000 and 2.175% for loans of $500,000 or more. In Suffolk County, which covers the Hamptons, it is 1.05% (NYS DTF memo TSB-M-05(4)R; NYC Department of Finance MRT report).

You don't pay all of it. On a typical home loan from a bank, the law puts the 0.25% special additional tax on the lender and says it can't be passed on to the borrower (Tax Law §253). So the buyer's share is 1.8% or 1.925% of the loan in the city and 0.8% in Suffolk. On a one- or two-family house the first $10,000 of the loan is also exempt from the 0.30% additional tax, which saves $30 (NYS DTF); our calculator leaves that out.

The tax is on the loan, not the price, so a bigger down payment lowers it, and an all-cash purchase avoids it. Co-op loans are not taxed at all, since a co-op loan is secured by shares rather than a recorded mortgage: the Department of Finance says mortgages on individual co-op apartments don't incur the tax (NYC DOF).

Transfer taxes: New York City and New York State

New York State's transfer tax is $2 for each $500 of the price, which is 0.4%, paid by the seller. In New York City, residential sales of $3 million or more pay an additional $1.25 per $500, making 0.65% in all (NYS DTF).

New York City's Real Property Transfer Tax is 1% of the price for homes of $500,000 or less and 1.425% above that. It covers one- to three-family houses, condo units and co-op apartments, including transfers of co-op shares (NYC DOF). There is no city transfer tax in the Hamptons. The East End has its own transfer tax, the Peconic Bay tax, and unlike the city's it is paid by the buyer.

The Peconic Bay tax in the Hamptons

The five East End towns (East Hampton, Riverhead, Shelter Island, Southampton and Southold) charge a 2% tax on property transfers to fund land preservation, and the law allows an extra 0.5% for a community housing fund (Tax Law §1449-bb). Southampton charges 2.5% in all (Town of Southampton), and East Hampton added the 0.5% housing fund tax from April 2023 (Town of East Hampton), as did Shelter Island and Southold; Riverhead did not. The buyer pays it (Tax Law §1449-dd).

Part of the price is exempt, but only when the price is $2 million or less. In East Hampton, Shelter Island and Southampton the first $400,000 of an improved residential property (one with a house) is exempt, or $100,000 of vacant land; in Riverhead and Southold it is $200,000 and $75,000 (Tax Law §1449-ee). Above $2 million the whole price is taxed. Our calculator applies the Southampton, East Hampton and Shelter Island rules; the first-time buyer exemption and the different figures for Riverhead and Southold are in our guide to buying in the Hamptons. That makes $2 million another cliff: at that price in Southampton the tax is $40,000; one dollar more and it is $50,000.

Co-op, condo or new development

Condo resale. The pattern above, plus the condo's application and move-in fees.

Co-op. You buy shares in a corporation and get a proprietary lease, so there is no deed to insure and no mortgage to record. That removes the mortgage recording tax and the owner's title insurance. Your attorney instead runs a lien search on the seller's shares, and if you borrow, the lender and the co-op sign a recognition agreement. The mansion tax and both transfer taxes still apply. The board sets its own application and move-in fees, and many boards set their own minimum down payment and ask to see savings left over after closing, so check the building's requirements before you budget.

New development. Buying from the developer (the sponsor) usually changes who pays the transfer taxes. Sponsors' contracts commonly ask the buyer to pay the seller's New York City and New York State transfer taxes, and often the sponsor's attorney fee and a working capital contribution to the new condo association, usually a set number of months of common charges. These are terms of the offering plan and contract, not law, and some are negotiable. Read the plan's closing-cost section with your attorney.

Title insurance, attorneys and the flip tax

There are two title policies: an owner's policy and a lender's policy, and the buyer generally pays for both. Title insurance rates and rules in New York are subject to approval by the Department of Financial Services, and the rate manual most insurers use is published by TIRSA. When both policies are issued at the same closing, the lender's policy is charged 30% of its normal rate (NYS Department of Financial Services). Ask for an itemised title bill before closing.

In New York, both sides normally have an attorney who negotiates the contract and handles the closing, and the lender has its own attorney whose fee the buyer pays. No law sets these fees. Ask for a flat fee in writing and for what it includes (contract review, the board package for a co-op, the closing itself).

A flip tax is a fee some co-ops charge when an apartment is sold. It isn't a government tax: the amount, how it is worked out (a percentage of the price, a per-share charge or a share of the profit) and who pays it are set by the co-op's own documents. It is usually the seller's cost, but a contract can shift it to the buyer, so ask for the building's flip tax terms early.

How to estimate the cash you need

Add four things: the down payment (the price less the loan); the buyer's taxes, which the rates above fix exactly; the buyer's fees (lender, title or lien search, attorneys, building, recording), which are estimates until you have quotes; and prepaid items, such as a year of homeowner's insurance and the property tax the lender holds in escrow.

Then check two things that aren't closing costs but still need cash. The contract deposit is paid when you sign, months before closing; it counts towards the down payment, so it isn't extra money, but it needs to be ready early. And a co-op board or lender may want to see savings left after closing. Neither is in the total below.

A worked example

A Manhattan condo resale at $1,500,000 with 20% down: a down payment of $300,000 and a loan of $1,200,000.

• Mansion tax, 1% of the price: $15,000.
• Mortgage recording tax, the buyer's 1.925% of the loan: $23,100.
• That is $38,100 in buyer's taxes, fixed by law.
• The calculator's estimates for the rest (lender fees, the bank's attorney, owner's and lender's title policies, recording, the buyer's attorney, the condo's move-in fees, three months of tax escrow and a year of insurance): $26,220. These are our assumptions, not quotes.
• Buyer's closing costs in all: $64,320, and cash needed at closing: $364,320.

The seller, meanwhile, pays $21,375 in city transfer tax (1.425%) and $6,000 in state transfer tax (0.4%). Open this example in the calculator to see every line and change any number.

The same apartment as a co-op drops the mortgage recording tax and title insurance: the calculator's buyer total is $33,450. As a new development where the buyer takes on both transfer taxes and a working capital contribution, it rises to $96,695.

In the Hamptons, a $2,500,000 house with 30% down ($1,750,000 loan) pays $25,000 in mansion tax, $14,000 in mortgage recording tax (0.8%) and $62,500 in Peconic Bay tax, since above $2 million there is no exemption. With the calculator's estimates for the rest, the buyer's closing costs come to $142,125 and the cash at closing to $892,125. Open the Hamptons example.