- December 27, 1996
- New York State Counsel, Office Managers and Agents
- Revised TP-584; Revised TP-584.1; and Form TP-584.2
Copies of the revised TP-584 Combined Real Estate Transfer Tax Return and Credit Line Mortgage Certificate and related schedules which reflect recent changes in the law are available from our New York City office.
Changes to the TP-584 Form Schedules
With respect to the TP-584 From, the previous form contained four (4) schedules; Schedule A - Information relating to Conveyance, Schedule B - Real Property Transfer Gains Tax Affidavit ("Gains Tax"); Schedule C - Real Estate Transfer Tax Return and Schedule D - Credit Line Mortgage Certificate.
The repeal of the gains Tax several months ago and the changes made to the law relating to credit line mortgages have resulted in the elimination of the old Schedule B Gains Tax Affidavit and a modification of the Schedule D Credit Line Mortgage Certificate. The new TP-584 return consists of only three (3) schedules; Schedule A - Information relating to Conveyance, Schedule B - Real Estate Transfer Tax Return (which had been Schedule C in the previous form) and Schedule C - Credit Line Mortgage Certificate (which had been Schedule D previously).
There are several changes which should be noted on the new TP-584 form. The title of the form has been changed to delete reference to the real property transfer gains tax affidavit. In Schedule A - Information relating to Conveyance, the new form eliminates use of the terms "Transferor" and "Transferee" and now refers to the parties to the transaction as "Grantor" and "Grantee". It also contains spaces for more than one Social Security number where there are multiple Grantors or Grantees in a transaction.
As mentioned earlier, old Schedule B (Gains Tax Affidavit) has been eliminated and replaced with a new Schedule B - Real Estate Transfer Tax Return (which had been Schedule C in the previous TP-584 Form). On Part I Line 1 of Schedule B of the new form, there is a box that should be checked if an exemption from the Transfer Tax is being claimed.
Schedule C - Credit Line Mortgage Certificate, has been amended to reflect changes resulting from an amendment to Section 253-b of the Tax Law. The recent amendment, codified as Section 253-b(1a) of the Tax Law, provides that on commercial credit line mortgages of less than $3,000,000, once the mortgage recording tax has been paid on the maximum principal amount secured by such mortgage, no further tax is payable on the recording or filing of instruments evidencing advances or readvances made by the lender under such mortgage.
For purposes of determining whether a commercial credit line mortgage secures a maximum principal indebtedness of less than $3,000,000, separate commercial credit line mortgages must be aggregated in certain cases. For example, where separate commercial credit line mortgages form part of the same or related transactions and have the "same or related mortgagors", the maximum principal indebtedness secured by all such separate mortgages must be aggregated to determine if the maximum principal amount secured is less than $3,000,000. There is a presumption that all mortgages recorded within a consecutive 12 month period, having the same or related mortgagors, are part of a related transaction. Such presumption can only be rebutted by clear and convincing evidence to the contrary.
Furthermore,, for purposes of the aggregation rule, the term "related mortgagors" includes members of a family related by blood, marriage or adoption to the original obligor, or to a person or entity where 50% or more of the beneficial interest in real property after the transfer of such property is held by the Grantor or such related person or entity.
When Credit Line Mortgage Certificate Must Be Completed
You will recall that the Credit Line Mortgage Certificate is to be completed only where a fee simple interest is being transferred. Real Property sold subject to an outstanding residential credit line mortgage or a commercial credit line mortgage of less than $3,000,000, except in those cases identified in Box 2 of Schedule C, where an exemption from tax is claimed, will be subject to a mortgage recording tax which must be paid at the time of the sale or transfer of the real property (See Box 4 of Schedule C).
If the real property being sold is not subject to an outstanding credit line mortgage, Box 1 of Schedule C should be checked. In the event that a Satisfaction of a credit line mortgage or a check to pay off such mortgage is delivered at the same time as the deed transferring the property, Box 3 should be checked.
Commercial credit line mortgages of $3,000,000 or more were not affected by the recent tax law amendments. Although a fee transfer of real property by a Grantor, subject to an outstanding commercial credit line mortgage of $3,000,000 or more, will not require the payment of a new mortgage recording tax at the time of transfer, the recording or filing if any instrument evidencing advances and readvances under such mortgage will be subject to mortgage recording tax.
Changes Regarding Execution of TP-584 Form
Finally, the signature portion of the TP-584 has been changed in that it no longer requires that the signatures of Grantor and Grantee be notarized. Under the new form, the Grantor and Grantee only have to sign the form underneath a statement that certifies that the return is true and complete to the best of their knowledge.
Changes Relating To The TP-584.1 Form
With respect to the TP-584.1 Real Estate Transfer Tax Supplemental Schedule, which relates to mortgage foreclosures and transfers in lieu of foreclosures involving real property or cooperative housing corporations, two changes should be noted. On Page 3, which contains the instructions on how to complete the TP 584.1 form, a sentence has been added to Part 1, line 1, which makes clear that, for the purposes of computing the consideration for the conveyance, the amount of the foreclosure judgment includes any interest accrued through the date of transfer. Also on Page 3, part III, relating to coop foreclosures, previous form TP 584.1 contained a line 15 which required that where the transfer involved the original conveyance of shares of stock in a cooperative housing corporation or was a subsequent conveyance of a non-residential unit, the portion of the liens or encumbrances remaining on the property of the cooperative housing corporation allocable to the shares being transferred had to be included in computing the consideration for the transfer. Line 15 has been moved to Line 18 on the new Form TP-584.1.
For your information, T.P. 584.1 contains Schedule F which relates to conveyances which consist of a mere change of identity and Schedule G which involves conveyances for which credit for tax previously paid by the grantor on the creation of a leasehold can be computed.
The TP-584.2 Form
Lastly, Form TP-584.2 relating to the recording of easements and licenses where the consideration for the grant of such easement or license is $500 or less can only be used by public utility companies regulated by the Public Service Commission and governmental agencies.
Should you have any questions regarding any of the forms, please contact Company Counsel.
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