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Updated for 2026 — NYC and New York State buyers are paying some of the highest Mortgage Recording Tax rates in the country. Understanding how these taxes work and how to legally reduce them can significantly lower closing costs, especially for refinancing borrowers.
Purchasing a home in New York often involves taxes and fees that increase total closing costs. One of the most impactful is the Mortgage Recording Tax (MRT), imposed by New York State and, in certain cases, additional NYC local taxes. Speaking with an experienced Real Estate Attorney in New York can help determine whether tax reduction strategies apply to your transaction.
In NYC, MRT rates are higher than the rest of the state due to additional local levies. Many buyers are surprised to learn that mortgages over $500,000 can add thousands of dollars in extra closing costs.
The MRT is a percentage fee charged when a mortgage is recorded. Rates vary by location and loan amount:
New York State Rate — typically 0.5% of the mortgage amount.
NYC Local Add-Ons — can push total rates up to 2.8% for high-value mortgages.
Residential vs Commercial — commercial mortgages often face higher rates.
Because MRT is applied to loan value, even a modest rate increase can meaningfully impact closing expenses.
| Location | Residential Under $500K | Residential $500K+ | Commercial |
|---|---|---|---|
| New York City (5 boroughs) | 1.8% | 1.925% | 2.8% |
| New York State (outside NYC) | 0.5% | 0.5% | varies |
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NYC charges additional local taxes on top of the statewide rate. These local additions are what make NYC closing costs significantly higher than the rest of New York State — especially for jumbo and commercial mortgages.
Several legal strategies can help NYC buyers and refinancing borrowers reduce or avoid the Mortgage Recording Tax. Always consult a New York real estate attorney to determine which approach applies to your transaction.
1. CEMA Loan (Consolidation, Extension & Modification Agreement): A CEMA allows borrowers to pay tax only on the “new money” portion of a loan instead of the entire amount.
Example: Refinancing from $300,000 to $400,000 means tax applies only to $100,000.
Works best for refinancing and high-value NYC mortgages but requires coordination between lenders.
2. Buy Cooperative Shares (Co-ops) Instead of Real Property: Co-op purchases are not subject to the Mortgage Recording Tax because buyers purchase corporate shares, not real estate.
Can lead to substantial savings in NYC, though co-op rules must be reviewed carefully.
3. Assume the Seller’s Existing Mortgage: Instead of taking a new loan, the buyer continues paying under the seller’s mortgage terms.
Since no new mortgage is recorded, no new MRT applies.
4. Use Seller Financing: The seller provides financing directly to the buyer, avoiding bank mortgages and often avoiding the MRT.
Terms are negotiated privately and can offer more flexibility.
5. Tax-Exempt Organization Purchases: Non-profits and other qualified tax-exempt entities may be exempt from mortgage tax if eligibility and documentation requirements are met.
Navigating the complexities of the Mortgage Recording Tax and identifying the best strategies for avoidance or reduction requires specialized legal knowledge. A Real Estate Attorney in New York can provide the necessary expertise and assistance.
1. Expert Guidance: An attorney can assess your specific situation and recommend the most effective strategies for minimizing MRT.
2. Coordination: Legal professionals can coordinate with lenders, sellers, and other parties to facilitate complex transactions like CEMA loans.
3. Compliance: Ensuring all legal requirements and documentation are properly handled to avoid potential issues or penalties.
4. Consultation Services: Through a Real Estate Attorney Consultation, buyers can gain a deeper understanding of the MRT implications and available strategies tailored to their circumstances.
1. Schedule a Consultation: Consulting with a New York real estate attorney is the initial step in investigating MRT avoidance strategies. This enables you to have a thorough conversation about your circumstances and get personalized guidance.
2. Gather Documentation: Having all required financial and property-related records on hand helps speed up the consultation process and enables the lawyer to offer more accurate advice.
3. Evaluate Options: With the attorney’s assistance, evaluate the feasibility and benefits of different strategies such as CEMA loans, co-op purchases, or mortgage assumptions.
4. Coordinate with Lenders: If pursuing a CEMA loan or mortgage assumption, work closely with your attorney and lenders to ensure all necessary steps are taken.
5. Monitor Compliance: Ensure that all transactions and filings comply with state and local regulations to avoid any future legal complications.
Refinancing typically triggers the Mortgage Recording Tax unless a CEMA (Consolidation, Extension, and Modification Agreement) is used. With a CEMA, borrowers only pay tax on the “new money” portion instead of the full refinanced loan amount, which can create substantial savings.
To avoid the Mortgage Recording Tax in New York, one must have a solid understanding of the tax laws and engage in a calculated legal strategy. There are several ways to lessen the financial impact of the MRT, including tax-exempt organizations, co-ops, seller financing, mortgage assumptions, and CEMA loans. A thorough Real Estate Attorney Consultation can offer the knowledge and direction needed to successfully negotiate this challenging environment. For more information or to schedule a consultation with an experienced Real Estate Attorney in New York, contact us today. Our team is committed to assisting you in completing a seamless and economical real estate transaction.
The mortgage recording tax in New York is a state and local tax imposed when a mortgage is recorded with the county clerk. It applies to most real estate loans and varies depending on the property’s location. In New York City, the rate can range from 1.8% to 2.8% of the loan amount, depending on whether the property is residential or commercial.
Typically, the borrower or property buyer pays the mortgage recording tax in NYC at the time the mortgage is recorded. However, in some transactions, the cost can be negotiated between the buyer and seller, or shared depending on the terms of the agreement.
A common way to legally avoid the mortgage recording tax in New York is through a Consolidation, Extension, and Modification Agreement (CEMA). A CEMA allows borrowers to consolidate an existing mortgage with a new one, avoiding double taxation on the previously paid portion. Working with an experienced real estate attorney in New York ensures proper compliance.
The NYC mortgage recording tax rate depends on the type and amount of the loan: Residential mortgages under $500,000 are taxed at 1.8%, residential mortgages of $500,000 or more at 1.925%, and commercial properties at 2.8%. Rates may vary by county.
Yes, refinancing generally triggers the mortgage recording tax unless you qualify for a CEMA transaction. If part of your existing mortgage has already been taxed, the CEMA allows you to pay the tax only on the new loan amount, not the total refinanced balance.
Certain entities and situations may be exempt from the mortgage recording tax, including government agencies, nonprofit housing organizations, and some transfers between related parties. Always consult a real estate attorney in New York to confirm eligibility for any exemptions.
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