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The Costs Associated With Buying and Selling a Home in New York

By Rosemary Liuzzo Mohamed and Carly Clinton

In America, owning a home is one of the most significant achievements and investments one will make in adulthood. Most home buyers focus their attention on the purchase price and the interest rate on their mortgage, but what many do not consider are the various other costs associated with purchasing a home and the financial obligations connected with closing costs. Lets explore.


There are several different taxes which may be anticipated in connection with the purchase of real property.

One type of tax is called the mansion tax. A purchaser is responsible for paying mansion tax for transactions that have a purchase price above one million dollars. The mansion tax rate depends on the purchase price. For example, the mansion tax rate is 1% for a purchase price between $1,000,000.00 to $1,999,999.00 and increases to 1.25% for a purchase price between $2,000,000.00 to $2,999,999.00. The tax rate will increase 0.25% as the price increases using the same formula discussed above.

When purchasing a property located in the five towns of Eastern Long Island known as the Peconic Bay Region which include Southampton, Easthampton, Shelter Island, Southold and Riverhead purchasers will be expected to pay the Peconic Bay Region Community Preservation Fund Transfer Tax. In Southold and Riverhead the tax amount is 2% on the amount over $75,000.00 on the purchase price of unimproved land and 2% on the amount over $150,000.00 on the purchase price of improved land. In Southampton, East Hampton and Shelter Island the tax amount is 2% on the amount over $100,000.00 on the purchase price of unimproved land and 2% on the amount over $250,000.00 on the purchase price of improved land.

If obtaining a mortgage, a purchaser is required to pay a mortgage tax based on the mortgage amount (not the purchase price). The mortgage tax rate varies based on the county in which the property is located. For example, in New York City the mortgage tax is 1.8% on mortgages under $500,000.00 and 1.925% on mortgage amounts above $500,000.00. The lender pays 0.25% of the mortgage tax while the borrower is responsible for the rest.

Bank Fees

Every lender has their own required fees associated with obtaining a mortgage. Nevertheless, every borrower can expect to encounter an upfront nonrefundable appraisal fee which can range anywhere between $250.00 to $750.00 depending on the size and detail of the property they are purchasing. All other bank fees will usually be collected at the closing and typically include a processing fee ($700.00-$1,250.00), credit report fee ($15.00-$35.00), flood determination fee ($5.00 – $20.00), tax service fee ($50.00 -$150.00), prepaid interest (this depends on the closing date and interest rate), lender’s attorney fee ($825.00-$1,500.00), and the initial escrow payment (this depends on the taxes for the property and homeowner’s insurance premium). Borrowers should expect to pay the first year of homeowner’s insurance and flood insurance at or before the closing date. **

Title Fees

A title search is required to ensure the person selling the property is actually the owner and to confirm there are no outstanding claims or liens against the property. The title search includes municipal searches which are informational searches that encompass the Building Department and Fire Department records. The municipal search will include information about the abutting street and a certificate of occupancy will be included along with any open building permits filed. The title search will also include a bankruptcy search for any filed bankruptcies against either party as well as a patriot search which searches the United States list of blocked persons.

If obtaining financing for the transaction, all lenders will require a loan policy which protects the lender from a dispute over ownership after the property is sold. This policy is in effect until the loan is paid off. In addition to the fee for the lender’s policy, the title company charges extra for endorsement pages that attach to the loan policy and are paid by the purchaser. A purchaser should obtain an owner’s title insurance policy which protects the purchaser against a claim to title after closing.

The purchaser is responsible for recording charges for the mortgage and deed. For example, for a property located in the five boroughs the recording charge for a deed is $52.00 and the recording charge for the mortgage is $120.00 along with a service fee to the title company. If a power of attorney is used the recording charge is $47.00.

Most standard contract of sales anticipate that the seller will provide a property survey to the purchaser is they have one. The purchaser can elect to have the survey updated or if no survey is available a new survey will need to be completed by the title company. If obtaining financing some lenders will require an updated survey. The property survey researches the property and takes note of the boundaries that make up the land. The cost for a new survey can range from $300.00 to $1,500.00.

If city and state taxes are due within 60 days of the closing the Lender will require the taxes to be paid at the closing. Since the title company is acting as an escrow agent to pay the taxes on the purchaser’s behalf there is usually an escrow service fee paid to the title company ($50-$75.00).

At the closing, common practice in New York includes paying an attendance fee of $250.00 to the title representative attending the closing.

Condominium Fees

A condominium property is similar to a real property transaction with regard to the fees discussed above, however, the one main difference is that condominium properties include common charges. Common charges are fees that cover the cost of the common shared elements in the building such as hallways, the roof, building mechanical systems, snow removal, etc. Normally, the management company will require the first month’s common charges be collected at the closing. Each condominium management company is specific and may have other charges or fees associated with a condominium closing in a particular building.

Cooperative Fees

A cooperative property (coop) is unlike the two properties discussed above. At a coop closing, the purchaser (shareholder) will ultimately own shares in a corporation evidenced by a stock certificate and will receive a proprietary lease allowing for occupancy of the unit.

In a cooperative transaction, the purchaser does not pay a mortgage tax and does not obtain a title report. Instead, the purchaser will obtain a lien search which discloses any outstanding liens against the unit, seller and the cooperative corporation. Lien search costs can range from $250-$600. If the purchaser is obtaining financing for the transaction, a UCC-1 statement will be filed with the county in which the property is located to put the world on notice that the purchaser is taking a loan for a security interest in stock shares. The cost for the UCC ranges from $40-$150.

Similar to a condominium, a cooperative transaction will usually include paying the first month’s maintenance fees at the closing. Maintenance fees are paid monthly to the cooperative corporation to maintain the building and also include a proportionate share of taxes owed for the unit in the building. The management company for the cooperative corporation will likely have their own specific set of transfer fees which might include a move-in fee, a recognition review fee, a power of attorney review fee (if one is used) and a closing attendance fee to name a few.

Seller Fees Real Property and Condominiums

When selling a home, a seller will typically pay less fees then a purchaser. The seller is normally responsible for paying all real estate broker commission fees at the closing unless the contract states otherwise. A common broker commission amount is 6% of the purchase price and is divided between the two brokers set forth in the deal sheet. A seller is also normally responsible for paying the transfer taxes, unless the contract states otherwise. For example, transfer taxes for New York State for a sales price below 3 million is 0.4% and 0.65% for sales of 3 million or more. In New York City, the transfer tax is 1% of the purchase price if below $500,000.00 and 1.45% for sales of $500,000.00 or more. The seller is responsible for the recording charges associated with the Real Property Transfer Report (RP-5217) which is required to accompany all deed filings, normally amounting to $125.00. This is usually in the form of ACRIS which has historically required taxpayers to list information about the “grantor” and the “grantee” in a transaction including their names, addresses and social security numbers.

The seller is also responsible for paying any open taxes, fuel and water charges against the property. The parties will adjust for any payments that have been paid in advance from the date of the closing through to the end of the pay period.

It is common practice for the seller to issue a Property Condition Disclosure Act Credit (“PCDA”) to the purchaser in the amount of $500.00. As a New York seller, the law requires a disclosure for certain property conditions or defects in the course of the sale. Under the law the seller must complete a standardized disclosure statement delivered to the purchaser. Common practice includes issuing the buyer a credit of $500 rather than complete the disclosure statement.

Seller Fees Cooperative

When selling a cooperative unit there are some additional fees involved that vary from the fees stated above. The normal fee for filing transfer documents is $100.00 and if the lien search company is preparing the documents, they usually charge a prep fee of $125.00. The seller may also incur fees from the building’s management company and cooperative unit which may include a closing cost, flip tax, unpaid maintenance fees, a move-out fee and transfer fee.

If the seller is paying off a mortgage on the property at closing, depending on the payoff lender, there is usually a payoff attorney fee payable to the firm handling the payoff transaction. A seller can expect to pay a recording fee for the preparation and filing of a UCC-3 termination statement which can range from $40-$150.

Legal Fees

When purchasing a home, legal representation is always recommended due to the complexity surrounding the transaction. In most cases, attorneys will charge a flat fee to complete a residential transaction, however, depending on the complexity of the transaction the attorney may charge hourly.

Important Tax Benefits for Residential Real Estate Investors

Owning real property for an investment purposes allows for certain tax advantages. Real estate depreciation is an income tax deduction that the IRS essentially allows for a non-cash tax deduction based on 27.5 years of straight line depreciation against the investor’s passive income portfolio. The benefit of real estate depreciation is to lower the overall tax liability and can help investors save on their taxes making investing in real estate a very advantageous business venture.

There are certain requirements a taxpayer must meet in order to be eligible for depreciation tax deductions. The taxpayer must own the real property, the property must be used for a business or income-producing activity, and the property must have a determinable beneficial life of more than one year. If the property is used for business and personal use the taxpayer can only deduct depreciation based on the business use of the property.

Real estate depreciation is an essential tax deduction that investors should understand and claim on their taxes every year.


The purchase or sale of a home is a tremendous life milestone. It is important to be aware of the fees associated with the transaction in order to eliminate some financial stress during the process. Our firm prides itself in representing lending banks for residential mortgages and has an excellent transactional team which represents purchasers and sellers for commercial and residential transactions.

** Type of Bank Fee Cost Range
Appraisal $250.00 – $750.00
Processing $700.00 – $1,250.00
Credit Report $15.00 – $35.00
Flood Determination $5.00 – $20.00
Tax Service $50.00 – $150.00
Lender’s Attorney Fee $825.00 – $1,500.00

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