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NYC Transfer Tax and Mansion Tax Changes

Posted By Robert Treuber, Friday, May 31, 2019
Updated: Friday, May 31, 2019

 

NYSLTA had a telephone call with the Taxation & Finance Department on Tuesday April 30th at 3:00. 

 

The following questions were asked by NYSLTA.

 

The Taxation and Finance Department’s answer follows each of the questions.

 

1.      If contracts made before April 1, 2019 are exempt from the new tax, what kind of proof will be required to show that the contract was actually made before April 1, 2019?  Besides the recording of the contract and/or payment of a deposit, what are the “other facts and circumstances” that the commissioner will require?

 

Will proof of a wire transfer be acceptable?

 

Does the down payment check or wire transfer need to be dated on or before April 1, 2019 for the conveyance to be exempt from the new tax?

 

If the contract is fully executed on or before April 1, 2019, but the contract permits the down payment to be made after April 1, 2019 (after the contract is fully executed), is the conveyance exempt from the new tax?

 

This question was primarily answered by Deb Lieberman. The phrase “other facts and circumstances” in the new statute came from prior transfer tax statutes. They will go back and look at earlier transfer tax cases and guidance and provide public guidance on the issue of when a contract is grandfathered. She opined that evidence of a wire transfer of a deposit will probably be acceptable evidence of the contract date.

 

A common theme through all of their answers was that public guidance will be provided soon, so stay tuned.

 

2.      If the closing occurs on or before July 1, 2019, does the deed have to be recorded on or before July 1, 2019 for the conveyance to be exempt from the new tax?  If the deed does not have to be recorded by July 1, 2019 will the date of the deed prior thereto be sufficient proof of a “conveyance” on or before July 1, 2019.

 

The date of conveyance is the date of “closing”, not the date of recording for purposes of paying the increased tax. If your deal closes before July 1 you do not have to try to rush to get it recorded before July 1 in order to beat the increase in the transfer tax.

 

3.       If a buyer purchases two condominium units, one for $1.5M and the other for $1M, is the State TT .4% for each or is it .65% because it is a “bulk” or “commercial” sale in the way that the City currently views it?  Will it make a difference if the two condominiums are purchased via one contract or via 2 separate contracts?

 

4.      Same concept if someone were to buy 2 units, each one for $2.5M, which aggregated is $5M.  However, the slight difference here is that the sale does not have to be considered “commercial” (although it may) because the dollar amounts in the aggregate exceed $3M, which is the threshold for the tax to increase to .65% for “residential” purchases. In other words, will aggregation be applied here? Again, will it make a difference if the two condominiums are purchased via one contract or via 2 separate contracts?

 

The Department did not answer questions 3 and 4 because they felt that further investigation is required on their part. They gave the impression that the same rules as currently apply for the City tax will probably be applied to bulk sales.

 

5.      When the rates go into effect, how will the TP-584 forms change to account for the different tax brackets?

 

There will be a new TP-584-NYC form. ACRIS is already on board with this. The form has a part III for the supplemental tax. This should be live at least 15 days in advance. That would be June 15.

 

6.      We would like the option to pay the Mansion Tax and Transfer Tax directly to the state on line prior to recording documents in the county.  This is would result in the state receiving payment prior to recording documents.

 

On-line payment of transfer tax is something that they would like to do, but it is not available yet. They are on board with the concept. “Maybe someday.”

 

7.      Once the new rates go into effect, will there be a contact person that we can speak with if we have additional questions?

 

They were reluctant to name a single contact person. Calls should go to the call center. If the call center cannot answer the question you should call any contact person that you are used to dealing with.

 

8.      Will regulations be issued for guidance to the industry?

 

There are no plans for a set of regulations. There will be public guidance published.

 

9.      What about mixed-use properties?  For instance, what if a property is sold that has commercial space on the ground floor and 2 residential apartments above?

 

Mixed use properties will be treated as residential for purposes of the additional transfer tax.

 

For the supplemental mansion tax the value of the property will be apportioned between the residential and commercial portions and the supplemental tax will only be applied to the residential portion. This is the way it is currently done.

 

 

 

Tags:  mansion tax  NYC  NYS Dept Tax & Finance  transfer tax 

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