Most buyers can reduce New York’s mortgage recording tax using a CEMA (Consolidation, Extension, and Modification Agreement), which taxes only the loan difference, or avoid it entirely by purchasing a co-op. However, CEMA loans require cooperation from both lenders and the seller, and they work best when the seller has a large outstanding mortgage balance.
At Sishodia PLLC, our real estate attorneys in Manhattan help buyers across New York navigate mortgage recording taxes and closing costs. Real estate lawyer Natalia Sishodia advises clients on CEMA transactions, co-op purchases, and strategies to minimize tax liability. Our NYC real estate lawyers can guide you through every step of your real estate transaction. Call at (833) 616-4646 to schedule a consultation.
This guide explains what New York’s mortgage recording tax is, how it’s calculated in Manhattan and NYC, and who typically pays it. It also covers two common strategies to reduce or avoid it: buying a co-op or using a CEMA.
What Is the Mortgage Recording Tax in New York?
The mortgage recording tax is a state and local tax imposed when you record a mortgage with the county clerk. New York State imposes a tax when a mortgage is recorded with the county clerk. The tax applies to all new mortgages and refinances, and it is calculated as a percentage of your loan amount.
New York City adds its own mortgage recording tax on top of the state tax. This combined tax makes NYC one of the most expensive places in the country to finance real estate. The tax applies only to real property such as condos, townhouses, and single-family homes. It does not apply to co-op apartments because co-ops are considered personal property, not real estate.
Key Takeaway: New York’s mortgage recording tax applies when you record a mortgage with the county clerk and is calculated as a percentage of your loan amount. In Manhattan, this combined state and local tax can reach approximately 2.05% to 2.175% of your mortgage for residential properties, making it one of your largest closing costs.
How Much Is the Mortgage Recording Tax in Manhattan?
In Manhattan and throughout New York City, the mortgage recording tax rate depends on your loan amount and property type. The tax is one of your largest closing costs if you are financing a condo or house purchase.
Residential Property Tax Rates
In NYC, the mortgage recording tax depends on the loan amount and how the property is classified. For many 1 to 3 family homes and individual condo units, buyers often pay roughly 1.8% (loans under $500,000) or 1.925% (loans $500,000 or more), plus a separate 0.25% ‘special additional tax’ that is typically paid by the lender on qualifying residential loans.
For other NYC mortgages, like many commercial loans or 4+ family properties, the rate can be different, and the tax isn’t always split the same way. If you want the most accurate number for a specific deal, NYC’s Department of Finance recommends using the ACRIS Mortgage Recording Tax calculator to confirm what’s actually due.
The lender also contributes 0.25% of the loan amount, known as the “special additional tax” or “quarter point.” Under Tax Law § 253(1-a), lenders must pay this portion for residential mortgages with six or fewer dwelling units. Combined, that’s about 2.05% on loans under $500,000 and 2.175% on loans of $500,000 or more, assuming the loan qualifies for the lender-paid 0.25%.
Note: Rates shown are for typical 1–3 family homes and individual condo units. Commercial properties and larger buildings may have different rates. Use NYC’s ACRIS Mortgage Recording Tax calculator to verify rates for your specific transaction.
| Amount | Borrower Pays | Lender Pays (Special Additional Tax) | Combined Rate |
|---|---|---|---|
| Under $500,000 | 1.8% | 0.25% | ~2.05% |
| $500,000 or more | 1.925% | 0.25% | ~2.175% |
Commercial Property Tax Rates
In NYC, for mortgages that aren’t tied to a 1 to 3 family home or an individual condo unit, you’ll often hear a 2.8% mortgage recording tax rate quoted on loans of $500,000 or more.
In a lot of commercial, mixed-use, and larger property deals, the extra 0.25% “special additional tax” usually isn’t handled the same way it is with typical small residential loans. Instead of being treated as the lender’s cost, it’s often passed through to the borrower, so you’ll commonly see it show up as part of your closing costs (depending on the deal and the lender).
Example Calculations
A $600,000 mortgage on a Manhattan condo results in a mortgage recording tax of approximately $13,050. This includes $11,550 paid by the borrower (1.925%) and $1,500 paid by the lender (0.25%). On a $400,000 loan, the borrower portion is roughly $7,200 (1.80%), and the lender portion is $1,000 (0.25%).
Key Takeaway: On a typical $600,000 Manhattan condo mortgage, you’ll pay approximately $13,050 in mortgage recording tax, including $11,550 from the borrower and $1,500 from the lender. This represents more than 2% of your loan amount and is due at closing.
How Are Mortgages Recorded in Manhattan?
When you close on a property purchase or refinance in Manhattan, your title company or attorney submits your mortgage documents through the ACRIS system. The system calculates the mortgage recording tax owed and allows the submitter to pay the tax electronically. Once recorded, the mortgage becomes public record and can be searched by anyone using the ACRIS database, which contains records dating back to 1966.
NYC’s eRecording process can provide email notifications/confirmations to registered submitters as part of electronic submission and processing (including recorded/rejected notifications), which can be faster than paper workflows. For properties in Staten Island, mortgages must still be recorded in person at the Richmond County Clerk’s office, as Staten Island does not use ACRIS.
Real Estate Attorney in Manhattan – Sishodia PLLC
Natalia A. Sishodia, Esq., LL.M.
Natalia A. Sishodia, Esq., LL.M., Managing Partner of Sishodia PLLC, serves Manhattan clients with tailored counsel across real estate, business, elder law, estate planning, and taxation. Fluent in English and Russian, she works with clients from the U.S. and abroad, including high-net-worth individuals, public figures, businesses, and major mortgage lenders seeking New York City legal guidance.
Her real estate practice centers on high-end NYC transactions: condo and co-op purchases and sales, single- and multi-family deals, new development purchases, conversions, deed transfers, leasing, lending, and 1031 exchanges. She has negotiated and closed hundreds of transactions and is known for detailed planning that keeps closings smooth and predictable. Her private client work also includes cross-border tax strategy, multijurisdictional wealth planning, trusts, digital assets, and cryptocurrency considerations.
What Is a CEMA Loan?
CEMA stands for Consolidation, Extension, and Modification Agreement. A CEMA lets your lender assign and consolidate the seller’s existing mortgage with your new loan. Because you consolidate the old and new mortgages rather than recording an entirely new mortgage, you pay mortgage recording tax only on the difference between the two loans.
Under New York law, when a mortgage is assigned rather than paid off and replaced, the recording tax applies only to any new debt being secured. This creates significant savings for borrowers who can structure their transaction as a CEMA.
How a CEMA Works in a Purchase
In a purchase CEMA, the seller’s lender assigns the existing mortgage to your lender. Your lender then consolidates that balance with any additional amount you’re borrowing. You generally pay mortgage recording tax only on the difference. Your lender then consolidates that assigned balance with any additional amount you need to borrow. You pay mortgage recording tax only on the new money, the difference between what you are borrowing and what the seller still owes.
For example, if the seller has a $300,000 mortgage balance and you need to borrow $500,000, you pay mortgage recording tax only on the $200,000 difference. This saves you approximately $3,600 to $3,850 compared to paying tax on the full $500,000 loan.
How a CEMA Works in a Refinance
When refinancing in Manhattan or NYC, a CEMA works similarly. Your current lender (or a new lender) extends and modifies your existing mortgage rather than paying it off and recording a completely new one. You pay the mortgage recording tax only on any additional amount you are borrowing beyond your current principal balance.
If your current mortgage balance is $400,000 and you refinance for $450,000, you pay tax only on the $50,000 increase. Without a CEMA, you’d typically pay tax on the full $450,000, often thousands more.
What Are the Requirements for a CEMA?
Both Lenders Must Agree
A CEMA requires both lenders to participate. If either lender declines, the transaction usually can’t be structured as a CEMA. Working with lenders that regularly handle CEMAs can reduce delays. Working with lenders familiar with the CEMA process in New York makes the transaction smoother and faster.
The Seller Must Have an Outstanding Mortgage
For a purchase CEMA to work, the seller must have a substantial mortgage balance remaining on the property. If the seller owns the property free and clear or has only a small mortgage balance, a CEMA provides minimal benefit. A purchase CEMA is most valuable when the seller still has a meaningful remaining mortgage balance. If the balance is small, the tax savings may not outweigh the added fees and time.
The Seller Must Cooperate
Because a CEMA adds complexity and can delay closing, the seller must agree to participate. Many sellers expect to split the mortgage recording tax savings with the buyer as compensation for the extra time and effort involved. You should address CEMA arrangements early in negotiations, ideally as part of your initial offer, to avoid disputes later.
CEMA Costs and Delays
CEMA transactions commonly involve assignment and processing fees (which vary by lender) plus additional legal/recording work; published estimates often cite lender/processing fees in the ~$1,500 to $2,000 range on average (and lender-specific assignment fee schedules can be higher or lower). Timing can also be longer than a standard closing, depending on lender responsiveness and document procurement.
Key Takeaway: A successful CEMA requires cooperation from both lenders and the seller, who must have a substantial remaining mortgage balance. While CEMAs add $1,500 to $2,000 or more in fees and can extend your closing timeline, the mortgage recording tax savings often exceed $5,000, making it worthwhile for many Manhattan buyers.
How Does a CEMA Benefit the Seller?
In certain transactions, especially sales of 1 to 3 family homes and individual condo units, a CEMA can reduce the amount of the purchase price that is treated as “taxable consideration” for transfer-tax purposes. That’s because, when structured properly, the buyer is treated as taking over (or “continuing”) part of the seller’s existing mortgage, rather than paying that portion as new consideration subject to transfer tax.
This can matter for both New York State and New York City transfer taxes. While people sometimes assume a CEMA only affects the state transfer tax, NYC can also allow an exclusion for the portion of the price tied to a pre-existing mortgage lien that remains in place after closing, but only if the deal meets specific requirements and does not run afoul of anti-avoidance rules.
Because the seller’s transfer taxes may be reduced, many sellers are willing to cooperate with a CEMA when the buyer offers to share the total tax savings. That often leads to a practical “win-win”: the seller may pay less in transfer tax, and the buyer can also reduce overall closing costs, especially when the savings are split.
How Can I Avoid the Mortgage Recording Tax Entirely?
Purchase a Co-op Instead of a Condo
The most straightforward way to avoid the mortgage recording tax completely is to buy a co-op apartment instead of a condo. When you purchase a co-op in Manhattan or elsewhere in New York, you are buying shares in a corporation that owns the building, not real property itself. You also receive a proprietary lease that gives you the right to occupy a specific unit.
Because co-op ownership is considered personal property under New York law, mortgages secured by co-op shares are not subject to the mortgage recording tax. Co-op buyers often avoid a cost that can be around 2% of the loan amount in NYC.
Understanding Co-op Financing
Co-op financing works differently from condo financing. When you finance a co-op purchase, your lender does not record a mortgage. Instead, the lender takes a security interest in your co-op shares and proprietary lease through a Uniform Commercial Code (UCC) filing. This filing does not trigger mortgage recording tax because it does not involve real property.
Many Manhattan buildings are co-ops, particularly older pre-war buildings on the Upper East Side, Upper West Side, and other established neighborhoods. Co-ops often have lower purchase prices than comparable condos, and the absence of mortgage recording tax makes them even more affordable at closing.
Where Are Mortgages Recorded in Manhattan?
Mortgages on Manhattan properties are recorded with the Office of the City Register through the ACRIS system. The physical office of the New York County Clerk is located at 60 Centre Street in lower Manhattan, though most recording is now done electronically.
The ACRIS system maintains digital records of all mortgages, deeds, and other property documents recorded in Manhattan since 1966. Anyone can search these records online at no charge. Title companies and real estate attorneys use ACRIS to verify property ownership, check for liens, and research title history before closings.
According to the NYC Department of Finance, ACRIS handles all mortgage recordings for Manhattan, Brooklyn, Queens, and the Bronx. Staten Island properties are still recorded through the Richmond County Clerk’s office, which maintains its own separate recording system.
Are There Any Other Ways to Reduce or Avoid the Tax?
While most buyers who finance a Manhattan purchase should expect to pay New York’s mortgage recording tax, there are a few limited scenarios where the tax can be reduced or avoided altogether. This depends on how the property is purchased and who the borrower is.
Cash Purchase
If you purchase property without mortgage financing, no mortgage recording tax applies because there is no mortgage to record. Cash buyers in Manhattan avoid this tax entirely, though they still must pay other closing costs, including title insurance, attorney fees, and transfer taxes.
Mortgage Assumption
In rare cases, you might be able to assume the seller’s existing mortgage rather than obtaining new financing. If the mortgage is assumable and the lender approves the assumption, you avoid recording a new mortgage and therefore avoid the recording tax on the assumed amount. However, most modern mortgages include due-on-sale clauses that prevent assumptions, making this strategy uncommon in Manhattan and NYC real estate transactions.
Tax-Exempt Organizations
Certain nonprofit organizations are exempt from mortgage recording tax under Tax Law § 253(3). If a voluntary nonprofit hospital corporation, fire company, volunteer ambulance service, or dormitory authority executes the mortgage, the tax does not apply. This exemption does not help most residential buyers but can benefit qualifying institutional borrowers.
Get Guidance on Manhattan Mortgage Recording Tax From Top-Rated NYC Real Estate Lawyers
The mortgage recording tax in Manhattan can add tens of thousands of dollars to your closing costs. Understanding your options to reduce or avoid this tax saves you money and makes homeownership more affordable.
At Sishodia PLLC, New York real estate attorney Natalia Sishodia has extensive experience helping clients navigate CEMA transactions, co-op purchases, and complex real estate closings throughout Manhattan and NYC. We work with lenders, title companies, and the other party’s counsel to structure transactions that minimize your tax liability while protecting your interests.
Call Sishodia PLLC today at (833) 616-4646 to schedule a consultation. Our office serves clients throughout Manhattan and the greater New York City area. We can review your specific situation, explain your options, and guide you through every step of your real estate purchase or refinance.
