New York real estate attorney Natalia A. Sishodia (https://sishodia.com/how-to-avoid-the-nyc-transfer-tax/) of Sishodia PLLC is providing guidance for property buyers and sellers facing New York City’s complex and costly transfer taxes. As real estate transactions in the city continue to involve significant tax burdens, understanding how to minimize these expenses is essential. Natalia A. Sishodia, a New York real estate attorney, emphasizes the importance of early planning and proper structuring to reduce exposure to both state and local taxes.
Transfer taxes, which are among the largest costs in a real estate transaction, are charged by both New York State and New York City. These taxes can impact buyers and sellers in significant ways. According to New York real estate attorney Natalia A. Sishodia, careful attention to transaction details—such as who pays which costs and how the contract is written—can lead to meaningful tax savings. The proper use of legal tools and timing can make a real difference in the final financial outcome for both parties.
Buyers and sellers working with a New York real estate attorney like Natalia A. Sishodia can explore exemptions, deductions, and timing strategies that may reduce the amount owed. One of the most effective options available is the purchase CEMA (Consolidation, Extension, and Modification Agreement), which may lower transfer tax liability by allowing the buyer to assume part of the seller’s existing mortgage. Structuring the transaction correctly, especially in a high-cost market like New York City, can significantly reduce taxes calculated on the sale price.
"Transfer taxes are not based on profit but on the contract price, which can drive up tax liability as sale prices increase,” said Natalia A. Sishodia. “With the right planning, it is possible to reduce that cost and keep more of the proceeds.”
For most transactions, the seller is responsible for paying the transfer tax, unless the contract states otherwise. However, if the buyer agrees to cover the seller’s costs, those payments may count as additional consideration and increase the total tax. A recent change to New York State tax law allows the seller’s state transfer tax to be excluded from consideration if the buyer pays it, but this rule does not apply to New York City’s transfer tax, known as the RPTT.
Timing also plays a major role. Transfer taxes are calculated based on the total consideration agreed upon in the sale contract, not the net proceeds. If a sale is made during a market upswing, the higher price can push the property into a higher tax bracket. New York real estate attorney Natalia A. Sishodia advises clients to time closings and contract signings strategically, taking into account market conditions and any anticipated legislative changes that could affect tax obligations.
When structured properly, a purchase CEMA may allow for taxes to be calculated only on the equity—the sale price minus the mortgage being assumed by the buyer—rather than on the full purchase price. In New York State, this continuing lien deduction is available for single-family homes, 2- and 3-family properties, and condos. In New York City, the lien must also meet additional requirements to qualify as excludible under Department of Finance rules. If the lien qualifies, the Real Property Transfer Tax may be calculated on the reduced amount.
Natalia A. Sishodia explains how even a simple misstep, such as changing the lender or altering loan terms within the city's review window, can cause the lien to lose its excludible status. In such cases, New York City taxes the full value of the transaction rather than just the equity. These rules are technical, but with early involvement from a New York real estate attorney, many common pitfalls can be avoided.
Additional costs such as the mansion tax must also be considered. In New York State, this tax applies to properties priced at $1,000,000 or more and is typically paid by the buyer. In New York City, an additional supplemental tax begins at $2,000,000, with rates increasing as the price rises. Natalia A. Sishodia notes that while many buyers are aware of the base tax, fewer understand the full scope of additional charges and how they can affect overall affordability.
Natalia A. Sishodia regularly works with domestic and international clients purchasing and selling property in New York City. Common services include representing buyers and sellers of condos, co-ops, single- and multi-family homes, new developments, and commercial properties. Structuring deals to align with local and state tax rules is a key part of every transaction.
Reducing transfer tax liability requires more than just accurate paperwork—it requires a thorough understanding of how taxes are applied at every stage of the deal. Natalia A. Sishodia and the team at Sishodia PLLC help clients assess their options and navigate these requirements to minimize unnecessary expenses.
Those planning to buy or sell real estate in New York City are encouraged to consult with a New York real estate attorney before finalizing any agreement. Early legal guidance can help ensure that the transaction proceeds smoothly and that transfer tax costs are properly managed from the start.
About Sishodia PLLC:
Sishodia PLLC is a New York City law firm led by Natalia A. Sishodia, Esq., LL.M., providing tailored legal services in real estate law. The firm advises domestic and international clients in a range of real estate transactions, offering detailed guidance on contracts, taxes, and closings. With a strong focus on practical solutions, Sishodia PLLC supports buyers and sellers throughout every step of the transaction process.
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