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 643 - Executory Contracts
Section 643.2 - Computation of taxes due in the case of a taxable executory contract

Universal Citation: 20 NY Comp Codes Rules and Regs ยง 643.2
Current through Register Vol. 46, No. 12, March 20, 2024

Tax Law, § 250

The principal debt or obligation which is used as the basis for computing the taxes described in Part 642 of this Part is that portion of the purchase price under the contract that remains unpaid as of the date that the purchaser has or is entitled to possession of the real property under the contract.

Example:

X Corporation entered into an executory contract to sell a 10-unit apartment building located in Flushing, Queens County, New York City to Y for a purchase price of $600,000. On October 1, 1990 the contract was executed and pursuant to its terms Y was required to make a $60,000 down payment. The contract also provided that an additional payment of $100,000 was required on December 1, 1990, at which time Y was entitled to possession of the premises.

Y will be required to make 10 semi-annual payments over a five year period to X Corporation to pay the remaining balance due under the contract, with the final payment due on December 1, 1995. Upon receipt of the final payment X Corporation will deliver a deed to the subject premises to Y.

Since the executory contract between C Corporation and Y grants the purchaser possession of the real property prior to the delivery of the deed, such contract is a mortgage, the recording of which is subject to tax.

The taxes due upon the recording of this contract are computed as follows:

Purchase price under the contract $600,000
Less: Downpayment - October 1, 1990 $ 60,000
Additional payment - December 1, 1990 $100,000
Total Subtractions $160,000
Total amount remaining unpaid at the time Y is entitled to possession -
December 1, 1990 $440,000
Basic tax due (($440,000 ÷ $100) × $.50) $ 2,200
Additional tax (($440,000 ÷ $100) × $.25) $ 1,100
Special additional tax due (($440,000 ÷ $100) × $.25) $ 1,100
New York City tax due @ $1.00 rate (($440,000 ÷ $100) × $1.00) $ 4,400
Total taxes due $ 8,800

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