- August 22, 1997
- All New York State Office Counsel, Managers and Agents
- New York City Real Property Transfer Tax - (RPT) Recent Statutory Changes Exclude the Amount of Pre-existing Mortgages, Liens or Encumbrances Remaining on Certain Property After Transfer of Title From the Consideration Paid for Purposes of Computing the Tax
In another positive development for the real estate industry in the City of New York, recent amendments of two statutes provide for an exclusion, from the consideration paid for the transfer of a one, two or three family house, individual residential condominium unit or individual residential cooperative unit, of the amount of any pre-existing mortgages, liens or encumbrances that remain on the property after the delivery of the deed or transfer of title. The enactment of Chapter 314 of the laws of 1997, which adds a new paragraph xii to Subdivision (b) of Section 1201 of the Tax Law and a new subdivision f to Section 11-2102 of the New York City Administrative Code, will effectively reduce (and perhaps, in some cases, eliminate) the amount of RPT Tax payable in connection with a transfer of property which falls into one of the above-mentioned categories, where the purchaser takes such property subject to pre-existing mortgages, liens or other encumbrances. However, the exclusion will not be allowed if the mortgage, lien or encumbrance was placed on the property in connection with or in anticipation of the transfer or conveyance or by reason of deferred payments of the purchase price whether represented by notes or otherwise. Furthermore, no exclusion will be allowed where the transferee is the mortgagee, lienor or encumbrancer or where the transfer qualifies as a REIT transfer which already receives a 50% tax rate reduction under other provisions of the law.
The amendments become effective for transfers taking place on or after August 28, 1997. There will be a new RPT Tax Return form available within the next few weeks which reflects the recent change in the law. Line 1 of Schedule 2 of the existing form will be amended to require the total consideration paid for the transfer to be shown on line 1a, the amount of continuing liens which survive closing to be shown on line 1b, and the amount of tax (computed by subtracting the amount shown on line 1b from the amount on line 1a) to be reported on line 1c.
The New York City RPT Tax Form and other tax forms can be obtained by personal computer, fax machine or by getting them the old fashioned way, via phone call requesting such forms.
Should you have any questions regarding this matter, please do not hesitate to contact the New York City Office.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- NY000047 New York City Real Property Transfer Tax (NYC-RPT) New Schedule M - Mere Change of Form Transfers
- Underwriting Manual:
- Exceptions Manual: