Understanding NYC Transfer Taxes
New York City imposes several layers of transfer taxes that directly impact 1031 exchange calculations. Understanding these taxes is crucial for properly structuring your exchange.
Real Property Transfer Tax (RPTT)
NYC's RPTT applies to all property transfers in the five boroughs:
- Properties up to $500,000: 1% of the sale price
- Properties over $500,000: 1.425% of the sale price
- Commercial properties over $500,000: 2.625% of the sale price
New York State Transfer Tax
In addition to city taxes, New York State imposes a 0.4% transfer tax on all real property transfers, with an additional 0.25% on properties over $3 million in NYC.
The Mansion Tax
Properties selling for $1 million or more in NYC are subject to the mansion tax, which ranges from 1% to 3.9% depending on the sale price. This progressive tax significantly impacts high-value exchanges.
Impact on 1031 Exchanges
Transfer taxes are paid from sale proceeds before funds go to your Qualified Intermediary. Proper planning ensures you have adequate equity to complete a fully tax-deferred exchange.