Expenses as Owner of Property in New York
Posted by Wei Min Tan on April 20, 2022
Closing Costs at Purchase
Closing costs are one time expenses when buying a property.
The biggest expense is the Mansion Tax. It applies to properties that are $1 million and above. For property price of $1 million to $1.99 million, the mansion tax is at 1 percent of price, $2 million to $2.99 million at 1.25 percent, $3 million to $4.99 million at 1.50 percent, $5 million to $9.99 million at 2.25 percent, $10 million to $15 million at 3.25 percent.
This is only applicable when buying with a mortgage loan, and it is roughly two percent of loan amount. If buying cash, there is no mortgage tax.
The title insurance is the insurance you pay to ensure clean title. This means that the seller has the right to sell the property. The title insurance insures against the potentiality of someone claiming ownership of the property after you close and own it.
Transfer Tax (if New Development)
When buying in a new development, closing costs essentially doubles because you have to pay for the transfer taxes and other new development related expenses.
With a resale property and if buying cash, closing costs are between 2 to 4 percent of purchase price. If buying resale with a mortgage, closing costs are roughly 6 to 7.5 percent of the loan amount. These closing costs double when buying new development because of the transfer tax and new development related expenses.
Weimin’s article: Stamp Duty, Closing Costs and New York Property
Common charges and property taxes are expenses that you pay while owning the property. Common charges are dependent on building and size of apartment. These are the fees paid to cover building staff salaries, repairs and maintenance of a building. Property taxes are paid to New York City and the city’s main source of revenue.
What’s a reasonable carrying cost amount which combines common charges and property taxes? The Manhattan average is about $2.70 per square foot per month. $3 and above is considered high.
In addition, there is homeowner’s insurance which costs between $600 to $1,500 per year.
Weimin’s article: How NYC property tax bill is calculated
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