NYC Transfer Tax: Buyer or Seller — Who Actually Pays?

Section 01What Is the NYC Transfer Tax — And Why Does It Matter?

Transfer taxes are fees imposed by state and city governments every time real property changes hands. In New York, you're dealing with two separate transfer taxes on every transaction: the New York State transfer tax and the New York City transfer tax. They're calculated as a percentage of the sale price and paid at closing.

On a typical Manhattan apartment sale, these combined transfer taxes can easily reach 1.4% to 2.075% of the purchase price — that's $14,000 to $20,750 on a $1 million sale, or $28,000 to $41,500 on a $2 million sale. These are real numbers that materially affect both sides of the deal.

Understanding these taxes isn't just about knowing the rates. It's about knowing who is legally responsible, who customarily pays, and when that custom gets overridden — because those three things aren't always the same.

Section 02New York State Transfer Tax — The Rates

The NYS transfer tax is straightforward. There are two rates based on the sale price:

The higher rate of 0.65% applies to the entire sale price once the threshold is crossed — not just the amount over $500,000. Since most NYC apartments sell well above $500K, the 0.65% rate is the one that applies in the vast majority of transactions.

Who pays: The seller is legally responsible for the NYS transfer tax. This is codified in state law. The seller pays it, and it shows up on the seller's side of the closing statement.

Section 03New York City Transfer Tax — The Additional Layer

On top of the state transfer tax, New York City imposes its own transfer tax — and this one is significantly larger.

Again, once the sale price exceeds $500,000, the higher rate applies to the entire amount — not just the portion above the threshold. Combined with the NYS transfer tax, a seller on a $1.5 million sale faces $31,125 in total transfer taxes (0.65% + 1.425% = 2.075%).

Who pays: Like the state tax, the NYC transfer tax is customarily paid by the seller. However — and this is critical — NYC's transfer tax is legally the responsibility of the grantor (seller), but the law states that if the seller fails to pay, the buyer becomes liable. This joint-and-several liability is why your attorney will always verify that transfer taxes are properly allocated and funded at closing.

For any sale over $500,000 — which is nearly every transaction in NYC — the combined NYS + NYC transfer tax rate is 2.075%. That's $20,750 on a $1M sale, $41,500 on a $2M sale, and $103,750 on a $5M sale. These are the seller's costs in a standard resale transaction.

Section 04The Mansion Tax — This One the Buyer Pays

While transfer taxes fall on the seller, there's a related closing cost that lands squarely on the buyer: the mansion tax. Despite its name, this tax kicks in at $1 million — which in NYC buys you a one-bedroom in many neighborhoods, not a mansion.

The mansion tax was expanded in 2019 into a progressive, tiered structure:

The mansion tax applies to the full purchase price at the applicable rate — it's not marginal. If you buy at $1,000,000, you owe $10,000. If you buy at $999,999, you owe zero. This is why you'll sometimes see properties listed at $999,000 or $1,995,000 — sellers and agents price strategically to keep buyers just below the next mansion tax tier.

The mansion tax is always and exclusively the buyer's responsibility. This is non-negotiable. It cannot be contractually shifted to the seller.

Section 05New Development — Where the Rules Flip

Here's where things change significantly, and where many first-time buyers get surprised: in new development (sponsor) sales, the sponsor almost always passes both the NYS and NYC transfer taxes to the buyer.

This is not technically a legal requirement — it's a market convention that has become virtually universal. The sponsor's purchase agreement will typically contain language requiring the buyer to pay "all transfer taxes customarily paid by seller." Since the sponsor sets the contract terms and most new development buyers accept them, this has become standard practice.

What this means in practice: if you're buying a $2 million condo in a new development, you're paying not only the $25,000 mansion tax (which would be yours anyway), but also the $41,500 in combined transfer taxes that would normally be the seller's cost. That's an additional $41,500 in closing costs that you wouldn't face in a resale purchase.

What Else the Sponsor Typically Passes to the Buyer

• Transfer taxes (NYS + NYC) — The seller's transfer taxes become the buyer's responsibility, adding 1.4%–2.075% to your costs
• Sponsor's attorney fees — Typically $2,500–$5,000 for the sponsor's legal representation
• Working capital fund contribution — Usually two months of common charges, paid into the building's operating reserve

When you add it all up, buyer closing costs on a new development condo typically run 4%–6% of the purchase price, compared to 2%–4% on a resale condo and 1%–2% on a resale co-op. This is one of the reasons why "sticker price" comparisons between new development and resale can be misleading — the total cost of acquisition is often significantly different.

In a hot market, rarely. But in a slower market or on units that have been sitting — particularly in buildings that are 70%+ sold and the sponsor is looking to close out remaining inventory — there is sometimes room to negotiate a transfer tax credit. The sponsor won't reduce the stated sale price (that would affect comps for the entire building), but they may offer a closing cost credit that effectively covers part or all of the transfer tax. Always ask — the worst they can say is no.

Section 06Real Dollar Examples at Every Price Point

Let me put concrete numbers on this so you know exactly what to expect. Here's the transfer tax picture at different price points for a standard resale versus a new development purchase:

In a standard resale, the combined transfer tax column is the seller's cost, and the mansion tax column is the buyer's cost.

In a new development purchase, the buyer pays everything — the combined transfer tax plus the mansion tax. On a $2 million new-development condo, that's $41,500 + $25,000 = $66,500 in transfer-related taxes alone, all on the buyer's side.

Pricing a property at $999,000 instead of $1,000,000 saves the buyer $10,000 in mansion tax instantly. Similarly, staying below $2M saves $25,000, and staying below $3M saves $45,000. Smart pricing around these thresholds can make a property significantly more attractive to buyers without the seller giving up meaningful value. This is one of those details where having an agent who understands the numbers makes a real difference.

Section 07Negotiating the Transfer Tax — What's Actually on the Table

While "the seller pays the transfer tax" is the default in NYC, everything in real estate is negotiable. Here are the scenarios where the allocation shifts:

When the Buyer Might Pay the Seller's Transfer Tax

New development purchases. As discussed, this is essentially standard. Budget for it from day one if you're looking at new construction or sponsor units.

Competitive bidding situations. In a multiple-offer scenario on a resale property, a buyer might offer to cover some or all of the seller's transfer tax as a way to sweeten the deal. This effectively increases the seller's net proceeds without raising the stated purchase price — which can matter for appraisal purposes.

Below-market pricing. If a seller prices aggressively below market to create competition, they may expect the winning bidder to shoulder transfer taxes as part of the deal terms.

When the Seller Might Offer a Transfer Tax Credit

Slow market conditions. When inventory is high and buyers have leverage, sellers may offer concessions that include covering part of the buyer's closing costs — which can include a credit equivalent to the transfer tax amount.

Units that have been sitting. If a property has been on the market well beyond the median days-on-market (currently around 68 days in NYC), the seller may be motivated to offer a transfer tax credit to close a deal.

New development closeouts. Sponsors trying to sell the last 10–20% of units in a building are often more willing to negotiate on transfer tax credits, attorney fees, and other closing cost concessions.

When I'm representing a buyer on a new development purchase, one of the first things I look at is how much of the building has sold, how long the remaining units have been available, and whether the sponsor has quietly offered concessions on other recent sales (this is public information on the Attorney General's website). That data tells me exactly how much room there is to negotiate — and whether a transfer tax credit is realistic.

QuestionsFrequently Asked Questions

Who pays transfer tax in NYC — the buyer or the seller?

In a standard resale transaction, the seller pays both the NYS transfer tax (0.4% or 0.65%) and the NYC transfer tax (1% or 1.425%). However, in new development purchases, the sponsor almost always contractually passes these taxes to the buyer. The mansion tax (1%–3.9% on purchases of $1M+) is always paid by the buyer regardless of deal type.

How much is the NYC transfer tax on a $1.5 million apartment?

On a $1.5M sale, the combined transfer taxes total $31,125 — broken down as $9,750 in NYS transfer tax (0.65%) and $21,375 in NYC transfer tax (1.425%). In a resale, the seller pays this. In new development, the buyer typically pays it. The buyer also pays the $15,000 mansion tax (1%) regardless.

Do co-ops pay transfer tax in NYC?

Yes. Even though co-op transactions involve the transfer of shares rather than real property, both the NYS and NYC transfer taxes still apply. The rates and who pays are the same as for condos. The key difference is that co-op buyers do not pay mortgage recording tax, which saves 1.8%–1.925% on the loan amount.

Can I negotiate who pays the transfer tax?

In a resale transaction, the allocation is negotiable — though it's customary for the seller to pay. In competitive markets, buyers sometimes offer to cover the seller's transfer tax to strengthen their offer. In new development, the transfer tax is harder to negotiate away directly, but sponsors may offer closing cost credits that effectively offset it, especially on units that have been available for a while.

Is the transfer tax deductible?

For the seller, no — transfer taxes are not deductible as an expense. However, they are added to the cost basis of the property, which reduces your capital gains when you sell. For the buyer, the transfer tax (if paid) is added to your acquisition cost basis. Always consult a tax professional for guidance specific to your situation.