Question 1

How much are closing costs in NYC for buyers?

Accepted Answer

Buyer closing costs in NYC typically range from 2-5% of the purchase price for condos and houses, and 1-3% for co-ops. The exact amount depends on the property type, purchase price, and loan amount. For a $600,000 condo purchase with a $480,000 mortgage, expect approximately $15,000-$25,000 in closing costs. Co-op closing costs are lower because there is no mortgage recording tax or title insurance. Nitin Gadura at Gadura Real Estate provides detailed closing cost estimates for every property his clients consider.

Question 2

What is the mortgage recording tax in NYC?

Accepted Answer

The mortgage recording tax is the largest closing cost for NYC buyers purchasing condos or houses. The rate is 1.8% of the mortgage amount for loans under $500,000 and 1.925% for loans of $500,000 or more. For example, on a $500,000 mortgage, you would pay $9,625 in mortgage recording tax. This tax does not apply to co-op purchases, which is one of the main reasons co-op closing costs are significantly lower. A CEMA (Consolidation, Extension, and Modification Agreement) can reduce this tax if the property has an existing mortgage.

Question 3

What is the NYC transfer tax and who pays it?

Accepted Answer

The NYC real property transfer tax is paid by the seller. The rate is 1.0% of the sale price for properties under $500,000 and 1.425% for properties at $500,000 or above. In addition, the New York State transfer tax of 0.4% also applies and is paid by the seller. Combined, sellers pay approximately 1.4-1.825% of the sale price in transfer taxes. On a $700,000 sale, the combined transfer taxes would be approximately $12,775. Nitin Gadura at Gadura Real Estate ensures sellers understand all costs before listing.

Question 4

What is the mansion tax in NYC?

Accepted Answer

The mansion tax is paid by buyers for purchases of $1 million or more. Despite the name, it applies to all property types including apartments. The rate starts at 1% for purchases between $1 million and $1,999,999 and increases progressively up to 3.9% for purchases of $25 million or more. For a $1.2 million purchase, the mansion tax would be $12,000. This tax was expanded in 2019 to include higher brackets for luxury properties. Nitin Gadura at Gadura Real Estate factors the mansion tax into all pricing discussions for properties near or above the $1 million threshold.

Question 5

How much are seller closing costs in NYC?

Accepted Answer

Total seller closing costs in NYC typically range from 8-10% of the sale price. The largest expense is the real estate commission (typically 5-6%), followed by the NYC transfer tax (1-1.425%), NYS transfer tax (0.4%), attorney fees ($2,000-$3,500), and any applicable co-op flip tax (1-3%). On a $700,000 sale, a seller might pay approximately $56,000-$70,000 in total closing costs. Nitin Gadura at Gadura Real Estate provides a detailed net proceeds estimate so sellers know exactly what they will take home.

Question 6

Are closing costs different for co-ops vs condos?

Accepted Answer

Yes, significantly. Co-op buyer closing costs are much lower (1-3% of purchase price) compared to condo buyer closing costs (3-5%). The main differences are that co-op buyers do not pay mortgage recording tax (saving 1.8-1.925% of the loan amount) or title insurance (saving $4,000-$7,000). Co-op buyers do pay application and move-in fees that condo buyers typically do not. For sellers, the main difference is that co-op sellers may owe a flip tax to the building, which condos generally do not charge. Contact Nitin Gadura at Gadura Real Estate for a side-by-side comparison.

Question 7

What is a flip tax on a co-op?

Accepted Answer

A flip tax is a transfer fee charged by a co-op building when shares are sold. Not all co-ops have flip taxes, but those that do typically charge 1-3% of the sale price or a per-share fee. The flip tax may be paid by the seller, the buyer, or split between them, depending on the building's rules. The revenue from flip taxes goes to the co-op corporation to fund building improvements and reserves. Always check a building's flip tax policy before making an offer. Nitin Gadura at Gadura Real Estate researches flip tax policies for every co-op his clients consider.

Question 8

How much are attorney fees for a NYC real estate closing?

Accepted Answer

Real estate attorney fees in NYC typically range from $2,000 to $3,500 for a standard residential purchase or sale. Both the buyer and seller hire their own attorneys, so each party pays their own fee. More complex transactions involving commercial properties, new construction, or unusual circumstances may cost more. In New York, attorneys handle contract review, title examination, closing coordination, and document preparation. Nitin Gadura at Gadura Real Estate can recommend experienced real estate attorneys who offer competitive rates.

Question 9

What is title insurance and do I need it?

Accepted Answer

Title insurance protects against defects in a property's ownership history, such as unknown liens, forged documents, undisclosed heirs, or recording errors. For condos and houses in NYC, a lender's title insurance policy is required by your mortgage lender, and an owner's policy is strongly recommended. The one-time premium typically costs $4,000-$7,000 depending on the purchase price. Co-op buyers do not need title insurance because they are purchasing shares in a corporation rather than real property. Nitin Gadura at Gadura Real Estate can explain which title policies are necessary for your specific purchase.

Question 10

Can I negotiate closing costs in NYC?

Accepted Answer

Some closing costs are negotiable while others are fixed. Government taxes and recording fees are non-negotiable. However, you can negotiate attorney fees, lender origination fees, and sometimes title insurance rates. In a buyer's market, sellers may agree to pay a portion of the buyer's closing costs as a concession. In new construction, developers sometimes offer closing cost credits as incentives. Your agent can also negotiate who pays certain fees in the contract terms. Nitin Gadura at Gadura Real Estate is an experienced negotiator who works to minimize closing costs for his clients.

Question 11

What is a CEMA and how does it save money?

Accepted Answer

A CEMA (Consolidation, Extension, and Modification Agreement) is a process that can significantly reduce the mortgage recording tax for condo and house buyers. Instead of recording an entirely new mortgage, the buyer's lender consolidates the existing mortgage with a new one, so the mortgage recording tax is only paid on the difference between the old and new mortgage amounts. For example, if the seller has a $300,000 mortgage and the buyer is taking a $500,000 mortgage, the buyer only pays mortgage recording tax on $200,000 instead of $500,000, saving approximately $3,600-$3,850. Not all lenders participate in CEMAs, so discuss this option early. Nitin Gadura at Gadura Real Estate regularly connects buyers with CEMA-friendly lenders.

Question 12

When do I pay closing costs in NYC?

Accepted Answer

Closing costs are paid on the day of closing, which typically occurs 60-90 days after the contract is signed for condos and houses, and 90-120 days for co-ops. Buyers bring a certified or cashier's check (or wire transfer) to closing for the down payment balance plus all closing costs. Your attorney will provide a detailed closing statement several days before closing so you know the exact amount needed. Sellers' closing costs are deducted from the sale proceeds at closing. Nitin Gadura at Gadura Real Estate ensures his clients receive accurate closing cost estimates well in advance so there are no last-minute surprises.

NYC Closing Costs: Frequently Asked Questions