In April of 2017, the Education Committee presented a CE/CLE session on sales tax for land title insurance transactions.

You can download a PDF of that presentation from this page.

If you have questions about sales tax, please email Bob Treuber at RGT@NYSLTA.ORG.

There has been much confusion regarding the calculation of the New York State Transfer Tax and Mansion Tax as a result of the amendment to Subdivision (a) of Section 1404 of the tax law (effective July 1, 2021). The most significant change in the law affecting our industry is that New York STATE no longer requires “grossing up” the purchase price for the NY STATE TRANSFER TAX when paid by the purchaser on a residential transaction (see italicized language below).

The amendment to TAX LAW SECTION 1404 states:

The real estate transfer tax imposed pursuant to section fourteen hundred two of this article shall be paid by the grantor and such tax shall not be payable, directly or indirectly, by the grantee except as provided in a contract between grantor and grantee or as otherwise provided in this section. If the grantor has failed to pay the tax imposed by this article at the time required by section fourteen hundred ten of this article or if the grantor is exempt from such tax, the grantee shall have the duty to pay the tax. Where the grantee has the duty to pay the tax because the grantor has failed to pay, such tax shall be the joint and several liability of the grantor and the grantee; provided that in the event of such failure, the grantee shall have a cause of action against the grantor for recovery of payment of such tax, interest and penalties by the grantee In the case of a conveyance of residential real property as defined in subdivision (a) of section fourteen hundred two-a of this article, if the tax imposed by this article is paid by the grantee pursuant to a contract between the grantor and the grantee, the amount of such tax shall be excluded from the calculation of consideration subject to tax under this article. (emphasis added)

According to the New York State Department of Taxation and Finance: “A clear reading of the amended statue provides ONLY the New York State Transfer Tax is not to be included in consideration where paid by the grantee on residential real property. So, in the case where a grantee is required to pay the New York CITY Real Property Transfer Tax (RPT) or anything else of that matter on behalf of the grantor, such amount is to added to the consideration for purposes of calculating the New York State transfer tax and mansion tax.”

Stated differently, the purchase price still must be grossed up by the amount of RPT transfer tax paid by the purchaser when calculating the New York STATE transfer tax and the Mansion Tax.

NOTE: There are NO changes in the law regarding the calculation of RPT transfer tax. The RPT transfer tax paid by the purchaser will still be grossed up by the amount of NY State transfer tax AND the amount of the NY City RPT transfer tax paid by the purchaser.

For example, assume a purchase price of 1 million dollars with the purchaser paying the NYS and NYC transfer taxes. The Gross up would be calculated as follows:

The following bills have been signed by the Governor. Please note the attached approval memo.

S2689 / A5324

Extends the town of Warwick preservation funds and the tax on real estate transfers in the town of Warwick until 2050

S3993 / A6011

Extends the limitations on the shift between classes of taxable property in the town of Orangetown, county of Rockland

S5785a / A2502a

Makes the affirmative allegation provisions for high-cost loans and subprime home loans applicable to foreclosures of residential mortgages covering one to four family dwellings.

APPROVAL MEMO.16

81312021                                                                                                     Legislative lnfornation - LBDC

APPROVAL MEMORANDUM - No- 16 Chapter 395

MEMORANDUM filed with Senate Bill Number 5785-A, entitled:

"AN ACT to amend the real property actions and proceedings law, in relation to foreclosure of residential mortgages covering one to four family dwellings"

APPROVED

This bill would amend the Real Property Actions and Proceedings Law to expand certain pleading requirements and defenses available in foreclo­ sure actions involving high-cost and subprime home loans, as those terms are defined in sections 6-1 and 6-m of the Banking Law respectively, to all foreclosure actions involving mortgages on residential one-to-four family homes.

It is important to provide homeowners with a full and fair opportunity to defend themselves in a foreclosure proceeding. While I agree with the sponsors' intent in that regard, this bill contains technical flaws that prevent its effective implementation _

Therefore, the Executive has secured an agreement with the Legislature to pass legislation in the upcoming session that would clarify the requirement for foreclosure actions involving all residential mortgage loans to plead compliance with the requirements of section 595-a of the Banking Law, and a clarification to avoid confusion about the applica­ tion of sections 6-1 and 6-m of the Banking Law. on that basis, I am signing this bill.

The bill is approved.                  (signed) ANDREW M. CUOMO

The following bill has been signed by the Governor. If you have any questions, please feel free to reach out.

A7127- Provides for certain commercial small businesses to be eligible for relief under the "COVID-19 Emergency Protect Our Small Businesses Act of 2021"