New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter IV - Sales And Use And Other Miscellaneous Taxes
Subchapter D - Mortgage Recording Taxes
Part 642 - Imposition Of Taxes
Section 642.7 - Examples of calculations of the mortgage recording taxes

Current through Register Vol. 46, No. 12, March 20, 2024

Example 1:

Mr. Smith acquires a one-family residence located in Nassau County, which imposes the additional tax, for $120,000. To finance his purchase, Mr. Smith borrows $100,000 from Bank Z and gives the bank a mortgage on the residence as security for the loan.

When the mortgage is presented for recording the taxes due are computed as follows:

* Since the mortgaged property is principally improved by a one-family residence, the $10,000 exclusion for purposes of the additional tax is allowed. (See section 642[b] of this Part for information regarding the $10,000 exclusion.)

** Since the mortgaged property is a one-family residence, Bank Z is required to pay the special additional tax (see section 642.3[c] of this Part).

Example 2:

Same facts as in example 1, except that the mortgaged property is located in New York City. In addition to the total tax computed in Example 1, City of New York tax at a rate of one dollar for each $100 of principal debt must be paid. Such tax would be $1000 given the facts of Example 1 computed as follows:

($100,000 ÷ $100) × $1.00 = $1,000.

Example 3:

Same facts as in Example 1, except that the mortgaged property is located in the City of Yonkers. In addition to the total tax computed in Example 1, City of yonkers tax at a rate of 50 cents for each $100 of principal debt must be paid. Such tax would be $500 given the facts of Example 1 computed as follows:

($100,000 ÷ $100) × 50 cents = $500.

Example 4:

Mr. Smith borrows $100,000 from Bank Z and gives the bank a mortgage on his 10-unit apartment building as security for the loan. The apartment building is located in the Bronx, New York City.

When the mortgage is presented for recording the taxes due are computed as follows:

* Since the real property covered by the mortgage is not principally improved or to be improved by a one- or two-family residence or dwelling, the $10,000 exclusion for purposes of the additional tax is not allowed (see section 642.3[b] of his Part).

** Mr. Smith is required to pay the special additional tax because the property is not principally improved by one or more structures containing in the aggregate not more than six residential dwelling units, with each unit having its own separate cooking facilities (see section 642.3[c] of this Part).

Example 5:

Mr. Jones sells a one-family residence located in Albany County, which imposes the additional tax, to his son for $80,000 and takes back a purchase money mortgage for 100 percent of the selling price.

When the mortgage is presented for recording the taxes due are computed as follows:

* Since the mortgaged property is principally improved by a one family residence, the $10,000 exclusion for purposes of the additional tax is allowed (see section 642.2[b] of this Part).

** The mortgage given to Mr. Jones is exempt from the special additional tax based on the residential-natural person exemption as provided at section 642.3[b] of this Part.

Example 6:

Mr. Jones owns two separate parcels of real property; one parcel is improved with a retail store, the other with Mr. Jones' personal residence. Both the store and the residence are located in Chenango County, a county which does not impose the additional tax.

The fair market values of the real property comprising the store and the personal residence are $110,000 and $75,000, respectively.

Mr. Jones borrows $50,000 from Bank X and gives the bank a mortgage on the two parcels as security for the loan. When the mortgage is presented for recording the taxes due are computed as follows:

* Mr. Jones is required to pay the special additional tax in the above example as the fair market value of the store exceeds the fair market value of the personal residence (see section 642.3[c] of this Part).

Example 7:

Mr. Jones owns a parcel or real property located in Albany County, a county that imposes the additional tax. The parcel is improved by a building which contains a commercial unit and a residential unit. The value of the commercial unit exceeds the value of the residential unit.

Mr. Jones borrows $100,000 from Bank Z and gives the bank a mortgage on the parcel as security for the loan.

When the mortgage is presented for recording the taxes due are computed as follows:

* Since the value of the commercial unit exceeds the value of the residential unit, the parcel is considered principally improved by the commercial unit, and therefore the $10,000 exclusion is not allowed for purposes of the additional tax (see section 642.2[b] of this Part).

** Also, Mr. Jones is required to pay the special additional tax because the property is not principally improved by one or more structures containing in the aggregate not more than six residential dwelling units (see section 642.3[c] of this Part).

Example 8:

A mortgage is to be recorded on a parcel of real property which is improved by two buildings, one a two-family residence, and the other a small retail grocery store.

The parcel is located in the Bronx, New York City. The principal debt secured by the mortgage is $1 million. The mortgagee is Mr. W, a natural person.

The fair market value of the two-family residence is $750,000 and the fair market value of the grocery store is 450,000.

When the mortgage is presented for recording the taxes due are computed as follows:

* Since the mortgage covers property principally improved by the two-family residence, the $10,000 exclusion for purposes of the additional tax is allowed (see section 642.2[b] of this Part).

** The mortgage would be required to pay the special additional tax, since the property is considered principally improved by the residential structure (see section 642.3[c] of this Part). Also, the residential-natural person exemption as described at section 642.3(b) of this Part would not apply since the mortgage covers property which consists of more than one structure.

*** Since the mortgage covers property which is not strictly a one-, two-, or three-family house or an individual residential condominium unit and the amount secured is $500,000 or more, the City of New York tax is computed using the highest rate (see section 642.4[a] of this Part).

Example 9:

Mr. T owns a parcel of real property, a portion of which is located in Schenectady County, and a portion of which is located in Montgomery County. The property is improved by two buildings; one a two-family house, and the other a small manufacturing plant. Scenectady County imposes the additional tax. Montgomery County does not impose the additional tax.

The fair market values of the real property comprising the two-family house and the manufacturing plant are $150,000 and $250,000, respectively.

The assessed value of the portion of the parcel that is located in Schenectady County, as such appears on the last assessment roll, is $37,500. Such assessed value of the portion of the parcel located in Montgomery County is $50,000.

Mr. T borrows $200,000 from Bank Y and gives the bank a mortgage on the parcel as security for the loan.

Upon recording the mortgage the required return was filed for the purpose of determining the correct amount of additional tax due.

The total taxes payable upon the recording of the mortgage are computed as follows:

* The $10,000 exclusion is not allowed for the purpose of computing the additional tax, as the parcel is considered principally improved by the manufacturing plant (see section 642.2[b] of this Part).

** The special additional tax must be paid by the mortgagor since the parcel is considered principally improved by the manufacturing plant (see section 642.3[c] of this Part).

Example 10:

Mr. M owns an office building located in New York City. on August 9, 1990 Mr. m borrowed $800,000 from Bank W and gave the bank two mortgages (mortgage #1 and mortgage #2) on the office building as security for the loan. Mortgage #1 secures $500,000 of the loan and mortgage #2 secures $300,000. When the mortgages are presented for recording the taxes are computed as follows:

* Since the mortgage covers property improved by an office building, the $10,000 exclusion for the purpose of computing the additional tax is not allowed (see section 642.2[b] of this Part).

** Since each mortgage covers property which is principally improved by an office building, the special additional tax must be paid by the mortgagor (see section 642.3[c] of this Part).

*** Since the mortgages are part of the same or related transactions and have the same mortgagor, the principal debt secured by each mortgage must be added together to determine the applicable rate of the City of New York tax. Since such aggregate amount is $500,000 or more and since each mortgage covers other than a one-, two- or three-family house or individual residential condominium unit, the City of New York tax must be computed using the $1.75 rate (see section 642.4 of this Part).

Example 11:

Mr. N owns two office buildings (Building #1 and Building #2) located in New York City. On September 9, 1990 Mr. N borrows $700,000 from Bank W. As security for the repayment of the loan Mr. N gives a mortgage to the bank covering Building #1 which is stated to secure $400,000 and also gives another mortgage to the bank covering Building #2 which is stated to secure $300,000.

When the mortgages are presented for recording the taxes are computed as follows:

* Since each mortgage covers property improved by an office building, the $10,000 exclusion for purpose of computing the additional tax is not allowed (see section 642.2[b] of this Part).

** Since each mortgage covers property which is principally improved by an office building, the special additional tax must be paid by the mortgagor (see section 642.3[c] of this Part).

*** Since the mortgages are part of the same or related transactions and have the same mortgagor, the principal debt secured by each mortgage must be added together to determine the applicable rate of the City of New York tax. Since such aggregate amount is $500,000 or more and since each mortgage covers other than a one-, two-, or three-family house or an individual residential condominium unit, the City of New York tax must be computed using the $1.75 rate (see section 642.4 of this Part).

Footnotes

* Since the mortgaged property is principally improved by a one-family residence, the $10,000 exclusion for purposes of the additional tax is allowed. (See section 642[b] of this Part for information regarding the $10,000 exclusion.)

** Since the mortgaged property is a one-family residence, Bank Z is required to pay the special additional tax (see section 642.3[c] of this Part).

*** Since the mortgage covers property which is not strictly a one-, two-, or three-family house or an individual residential condominium unit and the amount secured is $500,000 or more, the City of New York tax is computed using the highest rate (see section 642.4[a] of this Part).