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Everybody hates paying taxes. The payment of Real Estate Transfer Tax is no exception. New York City and New York State imposes Real Estate Transfer Tax on certain types of real property transactions. The payment of theses taxes are an additional closing cost borne by a Seller and/or a Purchaser of a real property transaction in New York. However, it does happen, on occasion, that one party, (i.e. a Grantor and/or a Grantee), to the real estate transaction is considered exempt from the payment of New York State and/or New York City Real Property Transfer Tax. Specifically, this article will examine those real estate transactions in which the Grantor and/or the Grantee are any one of the following: New York State, or its agencies and political subdivisions, the United States, its agencies and instrumentalities, the United Nations or a Charitable, Religious, Educational Organization.
New York State and New York City provides that certain governmental or charitable, religious, educational organizations or entities are exempt from the payment of real estate transfer tax. However, it is important to note that this same exemption from the payment of transfer tax applicable to such organizations or entities as a Grantor may also result in the liability for payment shifting to the Grantee in certain circumstances.
New York City provides that the following parties are exempt from the payment of Transfer Tax:
In transactions involving these types of governmental bodies, New York City does not relieve a Grantee from the liability for the payment of the transfer tax. Therefore, it is important to ascertain whether in a specific transaction the above-mentioned governmental body is the Grantor or Grantee. In such transactions where the above-mentioned governmental body is the Grantor, this exemption will relieve the Grantor from the obligation of having to pay the transfer tax. However, it will not relieve the Grantee from the liability of paying the transfer tax- rather, the liability for the payment of New York City Transfer Tax will shift to the Grantee and the Grantee must pay the transfer tax.
New York City also goes further in terms of exemptions and provides that New York City Real Estate Transfer Tax does not apply to any of the following deeds, instruments or transactions:
In these above-mentioned transactions, (1-4 above), since the transfer tax does not apply to any deed, neither the Grantor nor the Grantee is required to pay the Transfer Tax and there is no shifting of the liability as to the payment of transfer tax onto the Grantee.
Finally, please note, that in a transfer by or to a Tax Exempt organization, Schedule G of the New York City Real Property Transfer Tax Return must also be completed. Schedule G provides that a transfer by or to an eligible tax exempt organization is exempt from the Real Property Transfer Tax. To be eligible, an organization must be operated exclusively for religious, charitable or educational purposes and must provide proof of the organization’s tax exempt status. Schedule G provides that if claiming tax exempt status, Questions 1 and 2 of Schedule G will need to be answered. Question 1 asks if the Grantor or Grantee is an organization exempt from taxation pursuant to IRS Code Section 501(c) (3); and if the answer is yes, requests a copy of the letter from the U.S. Treasury Department granting the exemption. Question 2 asks if the Grantor or Grantee received an exemption from sales tax from the NYS Department of Taxation; and if the answer is yes, requests a copy of the letter from the NYS Department of Taxation and Finance granting the exemption.
New York State also provides that certain governmental organizations or entities are exempt from the payment of real estate transfer tax. This exemption for governmental organizations or entities including the following:
This exemption for such governmental organizations or entities does not extend to the Grantee. That is, if the above-mentioned exempt governmental entity conveys title to real property to a non-exempt individual or entity, there will be a transfer tax due which is payable by the Grantee.
In addition, New York State also provides that certain transactions are not subject to the real estate transfer tax:
In these types of transactions, since the transfer tax does not apply to any deed, neither the Grantor nor the Grantee is required to pay the Transfer Tax and there is no shifting of the liability as to the payment of transfer tax onto the Grantee.
In addition, New York State also provides that certain transactions are not subject to the real estate transfer tax:
In these types of transactions, since the transfer tax does not apply to any deed, neither the Grantor nor the Grantee is required to pay the Transfer Tax and there is no shifting of the liability as to the payment of transfer tax onto the Grantee.
In addition, unlike the City of New York, New York State does not provide an exemption from the payment of real estate transfer tax in connection with a deed, instrument or transaction by or to any religious, charitable or educational organizations or entities.
If you have any questions or would like further information regarding any of the articles in this newsletter, please contact Michael Alfieri, Esq. at (212) 651-1200 or malfieri@prestitle.com.
Also, if there are any topics that you would like us to include in future newsletters, please feel free to e-mail us with suggestions at info@prestitle.com.
NYC ECB PENALTY RELIEF PROGRAM: New York City has instituted a new New York City Penalty Relief Program for Homeowners and Business Owners. It is a 3-month program ( commencing September 21, 2009 and running through December 21, 2009) authorized by Mayor Bloomberg and the City Council which allows businesses and homeowners to resolve Environmental Control Board (“ECB”) violations that are “in default” and for which a hearing was scheduled before May 1, 2009. A violation is “in default” if the individual or business that received the violation failed to pay the fine or challenge the violation in a hearing within the required time frame.
Applicants can resolve their default violations by paying the base fine and will not have to pay additional penalties, late fees or interest. If a violation is associated with a correctible condition, known as a compliance violation, the condition must be corrected before participating in the program.
Applicants can resolve their default violations by paying the base fine and will not have to pay additional penalties, late fees or interest. If a violation is associated with a correctible condition, known as a compliance violation, the condition must be corrected before participating in the program.
WESTCHESTER COUNTY CLERK-PREP SYSTEM: As of January 1, 2010, the Office of the Westchester County Clerk will require that all land records submissions must be done through their web-based Property Records Electronic Portal (PREP) system. The PREP system is a web-based application from which it will be required to create cover pages and tax forms for documents submitted to the Office of the Westchester County Clerk after January 1, 2010. After January 1, 2010, in order to present a land records document for recording by the Westchester County Clerk, it must be accompanied by cover pages and tax forms created on the internet through the PREP system. Beginning October 1, 2009, the PREP system will be accessible for users to test it or begin using it to create cover pages and tax forms for actual document submissions. It is not mandatory to create the forms through PREP prior to the January 1, 2010 effective date.
If you have any questions or would like further information regarding any of the articles in this newsletter, please contact Michael Alfieri, Esq. at (212) 651-1200 or malfieri@prestitle.com.
Also, if there are any topics that you would like us to include in future newsletters, please feel free to e-mail us with suggestions at info@prestitle.com.
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