Transaction Costs: Manhattan Condominium
Posted by Wei Min Tan on February 7, 2022
Transaction costs, better known as “Closing Costs,” when buying or selling property in Manhattan, New York.
The transaction costs for a foreigner buying property in New York is the same as for a U.S. citizen. There are no incremental taxes or stamp duties levied on foreign buyers, unlike in many countries that are trying to curb inflow of foreign investors. A foreigner may decide to own under a more complex entity structure and this would incur additional expenses. However, a local may decide on similar complex entities as well.
For the buyer, the all-in works out to around 6 percent of loan amount if there is mortgage financing. If a cash purchase, it works out to around 2 percent of price. For the seller, transaction costs amount to around 8 percent of price.
We do not have a “stamp duty,” which is a British term. Our equivalent of the stamp duty are the various government taxes, mainly mansion tax and transfer taxes, listed below.
For The Buyer
The below are in order of significance and estimated. When buying brand new from a developer, the closing costs for the buyer roughly doubles compared to buying a resale property. This is because when buying brand new, the buyer has to pay New York City and New York State transfer taxes which amount to about 2 percent of price. In a resale, such transfer taxes are paid by seller.
Mansion tax is not applicable for property under $1 million. 1% for property price $1 million to $1.99 million, 1.25% for $2 million to $2.99 million, 1.50% for $3 million to $4.99 million, 2.25% for $5 million to $9.99 million, 3.25% for $10 million+.
Title insurance fee: 0.5% of property price
Market value rider: $250
Mortgage Related Fees (not applicable to all-cash buyers):
Mortgage tax: 1.925% of loan
Origination points: This is a variable used to buy down interest rate, from 0.5% of loan to 4% of loan
Bank application: $1,000
Board Package Fees:
Managing agent and building fees: $2,000
Credit report fee: $200 per applicant
Lead based paint disclosure: $50
Purchaser’s attorney: $2,500
Title closer service fee: $250
Bankruptcy search: $100
Patriot search: $100
Rec Mortgage: $300
Rec Deed: $200
RP5217NYC filing fee: $125
Condo unit power of attorney: $150
Condo insurance: $400 to $1500, an annual expense hence not specifically related to closing.
Real estate tax: Will be pro-rated back to seller based on what seller has already paid for post closing period.
New York City Transfer Tax: 1.425% of price (only when buying brand new from developer).
New York State Transfer Tax: 0.4% of price for property price <$3 million, 0.65% for >= $3 million (only when buying brand new from developer).
Deal example: 959 First Avenue in Midtown East. Represented multiple buyers at the $2 million price point. Amazing detailing and finishes. Property reserved at pre-construction stage and completed about 2 years later. This was a Toll Brothers development and reservation deposit was a very attractive 10 percent. Rented at high rents since closing.
Weimin’s article, How to buy new launch property in Manhattan
For The Seller (estimated)
New York City Transfer Tax: 1.425% of price
New York State Transfer Tax: 0.4% of price for property price <$3 million, 0.65% for >= $3 million
Broker Fee: Typically 6% of price
Seller’s Attorney: $2,000
Condo Board Fees: $1,500
Satisfaction of Mortgage: $200
Pickup/payoff fee: $500
Deal example: View from client’s terrace at 25 Park Row. Having outdoor space is a rare luxury in Manhattan and commands premium prices and rents.
What We Do
We focus on global investors buying Manhattan condos for portfolio diversification and long term return-on-investment.
1) Identify the right buy based on objectives
2) Manage the buy process
3) Rent out the property
4) Manage tenants
5) Market the property at the eventual sale
Deal example: Greenwich Club, 35th floor water view one bedroom apartment facing south. A high floor, south facing, water view is the most desirable view in Manhattan. Purchased with long term tenant in place hence no vacancy related to finding a new tenant.
Article updated February 7, 2022
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