When buying property in New York, there are several costs to consider. These include attorney fees, transfer taxes, mansion taxes, title insurances, mortgage recording taxes, mortgage-related fees, and other various fees like inspection and appraisal fees. It's crucial to account for these costs to understand the full price of the property transaction.
Understanding closing costs is a key part of budgeting for a home purchase in New York City.
These costs can vary depending on the property type and whether you're financing the purchase. The following information provides a general overview of typical buyer closing costs by property category to help you plan ahead with confidence.
Buyer Closing Costs Approx. Rates in NYC
1. Attorney Fee
In New York, both the buyer and seller must hire attorneys to handle the transaction. Buyers usually pay their own legal fees, which typically range from $2,000 to $4,000. For new developments, the buyer may also need to pay the developer’s attorney fee.
2. Transfer Tax
Transfer taxes are government fees applied to most property sales in NYC. They include both New York State and New York City components:
New York State Transfer Tax
Under $3M: 0.4% of the purchase price
$3M and above: 0.65% of the purchase price
New York City Transfer Tax
Under $500K: 1.4% of the purchase price
$500K and above: 1.425% of the purchase price
Total transfer taxes are commonly around 1.825%.
3. Mansion Tax
If the purchase price is $1 million or more, a mansion tax applies, starting at 1% and increasing with the property value.
4. Owner’s & Lender's Title Insurance
When buying a home in New York, title insurance is typically paid by the buyer and depends on the purchase price, loan amount, and the title company you choose. There are usually two components:
Owner’s Title Insurance: Optional but highly recommended. This protects the buyer against potential title issues such as forged signatures, undisclosed liens, or inheritance disputes.
Lender’s Title Insurance: Required by the lender if you're financing the purchase. It protects the bank’s interest in the property.
In New York, title insurance premiums follow a tiered rate structure. Here’s a general estimate based on common providers like Fidelity or First American:
Title Insurance Premium:
For properties ≤ $500,000: around 0.4% – 0.5% of the purchase price
For properties > $500,000: the marginal rate decreases slightly, typically totaling just under 0.5%
Other common fees (usually bundled by the title company):
Title Search: $300 – $500
Recording Fees: $200 – $500
Endorsements (optional coverage add-ons): $100 – $300
If you're taking out a mortgage, you’ll also need a Lender’s Policy, which generally costs 0.1% – 0.25% of the loan amount.
If you're paying all cash, you only need to purchase the Owner’s Policy. No lender policy is required.
Your attorney can help compare quotes from different title companies (the buyer’s lawyer usually selects the provider).
Title insurance is a one-time fee—not a recurring annual cost.
In new developments, the sponsor may designate the title company, leaving little room for negotiation.
For Example:
5. Mortgage Recording Tax for NYC (MRT)
The NYC Mortgage Recording Tax (MRT) is a buyer-paid closing cost of 1.8% for loans under $500,000 and 1.925% for loans of $500,000 or more. The tax is calculated based on the new loan amount, not the purchase price—so the larger your down payment, the lower your MRT. Buyers may reduce this tax by negotiating a Purchase CEMA (Consolidation, Extension, and Modification Agreement) with the seller.
MRT does not apply to co-op apartments in NYC. This is because the tax only applies to mortgage debt on real property, and co-ops are not technically considered as ‘real property.’
Current NYC MRT rates are:
6. Mortgage Related Fees
If you're purchasing the property with a mortgage, expect to incur various loan-related fees. For an accurate estimate, it's best to consult your lender directly, as charges can vary. The following figures are for general reference only
Inspection Fee: If the buyer chooses to hire a home inspector, the cost is typically around $450, depending on the property's condition.
Document Preparation Fee: Roughly $100–$200 for preparing the closing documents.
Registration Fee: About $100 to register the sale with government records.
HOA Prepayments: Some new developments require 2 to 12 months of HOA fees to be paid upfront at closing, depending on the building’s policy.
Property Tax Adjustment: Buyers may need to prepay property taxes for the month of closing, depending on the seller’s billing cycle.
Appraisal Fee: Optional third-party valuation of the property. Not always required, but may cost up to $1,500 based on scope.
Move-in Deposit (if applicable): Certain buildings may require a refundable deposit (~$1,000) to cover potential damage to shared common areas, especially for larger units.
Resident Manager Unit (RMU) Contribution (New Development Only): In larger new developments, buyers may be required to contribute toward the purchase of the live-in building manager’s apartment (commonly referred to as the “Resident Manager’s Unit” or RMU).
The RMU contribution is calculated pro rata based on the unit’s percentage of common interest.
The amount is typically specified in the offering plan (Schedule A) and paid at closing.
Funds are held by the condo board either in a working capital fund or a separate account.
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