Closing Costs Jerry M. Feeney, Esq. Manhattan Office:   Brooklyn Office: 303 Fifth Avenue, Ste. 405   374 Court Street New...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax ...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax ...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax ...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax ...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax ...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax ...
Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax ...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul>April 28, 2010
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul>...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer t...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer t...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer t...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer t...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer t...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer t...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer t...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer t...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer t...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Mansion tax based o...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Working capital fun...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Reserve fund contri...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Security fund contr...
Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Share of resident m...
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Closing Costs

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Closing Costs

  1. 1. Closing Costs Jerry M. Feeney, Esq. Manhattan Office: Brooklyn Office: 303 Fifth Avenue, Ste. 405 374 Court Street New York, New York 10016 Brooklyn, New York 11231 (212) 842-0237 (718) 233 6560 DE Capital Mortgage
  2. 2. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>Also known as the “deed tax” </li></ul></ul></ul><ul><ul><ul><ul><li>But applies to coops also </li></ul></ul></ul></ul>April 28, 2010
  3. 3. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>Also known as the “deed tax” </li></ul></ul></ul><ul><ul><ul><ul><li>But applies to coops also </li></ul></ul></ul></ul><ul><ul><ul><li>$2 for every $500 of purchase price or portion thereof </li></ul></ul></ul>April 28, 2010
  4. 4. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>Also known as the “deed tax” </li></ul></ul></ul><ul><ul><ul><ul><li>But applies to coops also </li></ul></ul></ul></ul><ul><ul><ul><li>$2 for every $500 of purchase price or portion thereof </li></ul></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Purchase price of condo is $500,000 </li></ul></ul></ul></ul>April 28, 2010
  5. 5. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>Also known as the “deed tax” </li></ul></ul></ul><ul><ul><ul><ul><li>But applies to coops also </li></ul></ul></ul></ul><ul><ul><ul><li>$2 for every $500 of purchase price or portion thereof </li></ul></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Purchase price of condo is $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>$500,000 / 500 = 1,000 </li></ul></ul></ul></ul>April 28, 2010
  6. 6. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York State Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>Also known as the “deed tax” </li></ul></ul></ul><ul><ul><ul><ul><li>But applies to coops also </li></ul></ul></ul></ul><ul><ul><ul><li>$2 for every $500 of purchase price or portion thereof </li></ul></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Purchase price of condo is $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>$500,000 / 500 = 1,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>$2 x 1,000 = $2,000 </li></ul></ul></ul></ul>April 28, 2010
  7. 7. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>1% of sale price if $500,000 or less </li></ul></ul></ul>April 28, 2010
  8. 8. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>1% of sale price if $500,000 or less </li></ul></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Sale price $500,000 </li></ul></ul></ul></ul>April 28, 2010
  9. 9. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>1% of sale price if $500,000 or less </li></ul></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Sale price $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>$500,000 x .01 = $5,000 tax </li></ul></ul></ul></ul>April 28, 2010
  10. 10. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>1.425% of sale price if greater than $500,000 </li></ul></ul></ul>April 28, 2010
  11. 11. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>1.425% of sale price if greater than $500,000 </li></ul></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Sale price $502,000 ($2,000 higher) </li></ul></ul></ul></ul>April 28, 2010
  12. 12. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax </li></ul></ul><ul><ul><ul><li>1.425% of sale price if greater than $500,000 </li></ul></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Sale price $502,000 ($2,000 higher ) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>$502,000 x .01425 = $7,153.50 tax ($2,153.50 higher ) </li></ul></ul></ul></ul>April 28, 2010
  13. 13. Understanding Closing Costs <ul><li>Seller’s closing costs </li></ul><ul><ul><li>New York City Real Property Transfer Tax (individual sales) </li></ul></ul><ul><ul><ul><li>1.425% of sale price if greater than $500,000 </li></ul></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Sale price $502,000 ($2,000 higher ) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>$502,000 x .01425 = $7,153.50 tax ($2,153.50 higher ) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Seller nets $153.50 less by selling for $2,000 more </li></ul></ul></ul></ul>April 28, 2010
  14. 14. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul>April 28, 2010
  15. 15. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul><li>Applies to transactions of $1,000,000 and over </li></ul></ul></ul>April 28, 2010
  16. 16. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul><li>Applies to transactions of $1,000,000 and over </li></ul></ul></ul><ul><ul><ul><li>Flat 1% of entire purchase price </li></ul></ul></ul>April 28, 2010
  17. 17. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul><li>Mixed use buildings </li></ul></ul></ul><ul><ul><ul><li>If building is mixed use, and total purchase price is $1,000,000 or over, pay on the amount allocated to residential (even if allocated amount is less than $1,000,000) </li></ul></ul></ul>April 28, 2010
  18. 18. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul><li>Mixed use buildings </li></ul></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Purchase price is $1,200,000 </li></ul></ul></ul></ul>April 28, 2010
  19. 19. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Purchase price is $1,200,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Building is mixed use, 1/3 commercial, 2/3 residential </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Floor one is a grocery store </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Floors two and three are residential apartments </li></ul></ul></ul></ul></ul>April 28, 2010
  20. 20. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Purchase price is $1,200,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Building is mixed use, 1/3 commercial, 2/3 residential </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Allocation is $400,000 commercial, $800,000 residential </li></ul></ul></ul></ul>April 28, 2010
  21. 21. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Mansion tax </li></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Purchase price is $1,200,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Building is mixed use, 1/3 commercial, 2/3 residential </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Allocation is $400,000 commercial, $800,000 residential </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Pay mansion tax on $800,000 only ( e.g. $8,000) </li></ul></ul></ul></ul>April 28, 2010
  22. 22. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul>April 28, 2010
  23. 23. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>1.80% if less than $500,000 </li></ul></ul></ul></ul>April 28, 2010
  24. 24. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>1.80% if less than $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul>April 28, 2010
  25. 25. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>1.80% if less than $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mortgage is $499,999 </li></ul></ul></ul></ul></ul>April 28, 2010
  26. 26. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>1.80% if less than $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mortgage is $499,999 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchaser pays 1.8% or $8,999.98 </li></ul></ul></ul></ul></ul>April 28, 2010
  27. 27. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>1.80% if less than $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mortgage is $499,999 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchaser pays 1.8% or $8,999.98 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>1.925% if $500,000 or more </li></ul></ul></ul></ul>April 28, 2010
  28. 28. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>1.80% if less than $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mortgage is $499,999 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchaser pays 1.8% or $8,999.98 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>1.925% if $500,000 or more </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mortgage is $500,000 </li></ul></ul></ul></ul></ul>April 28, 2010
  29. 29. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>1.80% if less than $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mortgage is $499,999 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchaser pays 1.8% or $8,999.98 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>1.925% if $500,000 or more </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mortgage is $500,000 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchaser pays 1.925% or $9,625.00 </li></ul></ul></ul></ul></ul>April 28, 2010
  30. 30. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>1.80% if less than $500,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mortgage is $499,999 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchaser pays 1.8% or $8,999.98 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>1.925% if $500,000 or more </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mortgage is $500,000 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchaser pays 1.925% or $9,625.00 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>In other words , purchaser pays $625.02 more for the opportunity to borrow $1 extra of mortgage money </li></ul></ul></ul></ul></ul>April 28, 2010
  31. 31. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>On commercial “bulk rate” scenario, NYS takes the position that the commercial rate applies . . . </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>2.05% if loan is less than $500,000 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>2.80% if loan is $500,000 or more </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Lender pays 25 basis points it unit encumbered is 1-6 family residence </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>But it also takes the position that the mansion tax applies! </li></ul></ul></ul></ul>April 28, 2010
  32. 32. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>Some things to be aware of </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Negative amortization loans, the MRT is based on the maximum amount the loan could grow to </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>If the maximum amount kicks over the $500,000 mark, then the MRT is based on 1.925% </li></ul></ul></ul></ul></ul>April 28, 2010 April 21, 2008 (c) 2008 Jerry M. Feeney, Esq.
  33. 33. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Mortgage recording tax </li></ul></ul></ul><ul><ul><ul><ul><li>Some things to be aware of </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Adding an unused HELOC that brings total mortgage amount above threshold of $500,000 forces the MRT on both loans to be 1.925% </li></ul></ul></ul></ul></ul>April 28, 2010 April 21, 2008 (c) 2008 Jerry M. Feeney, Esq.
  34. 34. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Title charges </li></ul></ul></ul><ul><ul><ul><ul><li>Policy rates regulated by statute </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Be careful: </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Bulk rate only applies for new construction / conversion with 10 or more units </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>8 unit conversion, $1,000,000, $750,000 mortgage </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Bulk rate is $3,156 and $617 but that is wrong </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Correct quote is $4,508 and $881 </li></ul></ul></ul></ul></ul>April 28, 2010
  35. 35. Understanding Closing Costs <ul><li>Purchaser’s closing costs </li></ul><ul><ul><li>Condos and houses only </li></ul></ul><ul><ul><ul><li>Title charges </li></ul></ul></ul><ul><ul><ul><ul><li>Policy rates regulated by statute </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Be careful: </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Some lawyers use leasehold insurance on a coop purchase </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>When buying from an estate, this is considered prudent </li></ul></ul></ul></ul></ul>April 28, 2010
  36. 36. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer taxes </li></ul></ul><ul><ul><ul><li>Based on adjusted price </li></ul></ul></ul>April 28, 2010
  37. 37. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer taxes </li></ul></ul><ul><ul><ul><li>Based on adjusted price </li></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchase price $600,000 </li></ul></ul></ul></ul></ul>April 28, 2010
  38. 38. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer taxes </li></ul></ul><ul><ul><ul><li>Based on adjusted price </li></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchase price $600,000 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS deed tax would be $2,400 (600,000 / 500 x $2) </li></ul></ul></ul></ul></ul>April 28, 2010
  39. 39. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer taxes </li></ul></ul><ul><ul><ul><li>Based on adjusted price </li></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchase price $600,000 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax would be $2,400 (600,000 / 500 x 2) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYC transfer tax would be $8,550 (1.425% of 600,000) </li></ul></ul></ul></ul></ul>April 28, 2010
  40. 40. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer taxes </li></ul></ul><ul><ul><ul><li>Based on adjusted price </li></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchase price $600,000 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax would be $2,400 (600,000 / 500 x 2) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYC transfer tax would be $8,550 (1.425% of 600,000) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Adjusted purchase price is $610,950 (600,000 + 2,400 + 8,550) </li></ul></ul></ul></ul></ul>April 28, 2010
  41. 41. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer taxes </li></ul></ul><ul><ul><ul><li>Based on adjusted price </li></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchase price $600,000 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax would be $2,400 (600,000 / 500 x 2) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYC transfer tax would be $8,550 (1.425% of 600,000) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Adjusted purchase price is $610,950 (600,000 + 2,400 + 8,550) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax payable is $2,444 (610,950 / 500 x 2) </li></ul></ul></ul></ul></ul>April 28, 2010
  42. 42. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer taxes </li></ul></ul><ul><ul><ul><li>Based on adjusted price </li></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchase price $600,000 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax would be $2,400 (600,000 / 500 x 2) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYC transfer tax would be $8,550 (1.425% of 600,000) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Adjusted purchase price is $610,950 (600,000 + 2,400 + 8,550) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax payable is $2,444 (610,950 / 500 x 2) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYC transfer tax payable is $8,706.04 (1.425% of 610,950) </li></ul></ul></ul></ul></ul>April 28, 2010
  43. 43. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer taxes </li></ul></ul><ul><ul><ul><li>Based on adjusted price </li></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchase price $600,000, contract says buyer pays ½ of transfer taxes </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax would be $2,400 (600,000 / 500 x 2) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYC transfer tax would be $8,550 (1.425% of 600,000) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Adjusted purchase price is $606,675 (600,000 + ½ x (2,400 + 8,550)) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax payable is $1,213.35 (1/2 x 606,675 / 500 x 2) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYC transfer tax payable is $4,322.56 (1/2 x 1.425% of 606,675) </li></ul></ul></ul></ul></ul>April 28, 2010
  44. 44. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Seller’s transfer taxes </li></ul></ul><ul><ul><ul><li>Based on adjusted price </li></ul></ul></ul><ul><ul><ul><ul><li>Example </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Purchase price $495,000, contract says buyer pays all of seller’s transfer taxes </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax would be $1,980 (495,000 / 500 x 2) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYC transfer tax would be $4,950 (1.0% of 495,000) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Adjusted purchase price is $501,930 (495,000 + 1,980 + 4,950) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Now the transaction is subject to 1.425% NYC tax </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYS transfer tax payable is $2,007.72 (495,000 / 500 x 2) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NYC transfer tax payable is $7,152.50 (1.425% of 501,930) </li></ul></ul></ul></ul></ul>April 28, 2010
  45. 45. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Mansion tax based on adjusted price </li></ul></ul><ul><ul><ul><li>Example </li></ul></ul></ul><ul><ul><ul><ul><li>Purchase price $985,000 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>NYS transfer tax would be $3,940 (985,000/500*2) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>NYC transfer tax would be $14,036.25 (985,000*0.01425) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Adjusted price is $1,002,976.25 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Now the transaction is subject to the mansion tax of 1% or $10,029.76 </li></ul></ul></ul></ul>April 28, 2010
  46. 46. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Working capital fund contributions </li></ul></ul><ul><ul><ul><li>Can be as high as two months common charges </li></ul></ul></ul>April 28, 2010
  47. 47. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Reserve fund contribution </li></ul></ul><ul><ul><ul><li>Can be as high as three months common charges </li></ul></ul></ul>April 28, 2010
  48. 48. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Security fund contribution </li></ul></ul><ul><ul><ul><li>Can be as $25,000 in some of the Battery Park projects </li></ul></ul></ul>April 28, 2010
  49. 49. Understanding Closing Costs <ul><li>Purchaser’s closing costs – new construction </li></ul><ul><ul><li>Share of resident manager’s unit </li></ul></ul><ul><ul><ul><li>Two options: </li></ul></ul></ul><ul><ul><ul><ul><li>Option one: condominium association buys the unit outright </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Downside: higher payment at closing </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Option two: condominium association gives a mortgage to buy it </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Downside: higher common charges </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Convert the decision into a sales positive </li></ul></ul></ul></ul>April 28, 2010

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