New York’s special additional mortgage recording tax is a state charge of $0.25 for every $100 of principal debt secured by a mortgage recorded against real property in New York. On a $500,000 loan, that’s $1,250, and it sits on top of the basic recording tax and, in the counties inside the Metropolitan Commuter Transportation District, an additional tax as well. Who actually writes the check depends on what kind of property secures the loan and who the lender is.
How the Tax Is Calculated
The rate is $0.25 per $100 of principal debt, applied to the maximum amount the mortgage could secure at any point during its life.1New York State Senate. New York Tax Law 253 – Recording Tax If the loan permits future draws or has a variable component, the tax is computed on the full potential amount, not just what funds at closing. The principal has to be stated on the face of the mortgage instrument so the recording officer can verify the number.
The math is simple. Divide the principal by 100 and multiply by $0.25. A $400,000 mortgage generates $1,000 in special additional tax. A $750,000 mortgage generates $1,875. That’s one layer of a stack. The basic recording tax is generally $0.50 per $100, and mortgages recorded in MCTD counties carry another $0.30 per $100.2NYC Department of Finance. Statistical Profile of the New York City Mortgage Recording Tax Combined, total recording taxes on a New York City mortgage run roughly 2.05% to 2.80% of the loan amount depending on property type.
Who Pays the Tax
The answer turns on what secures the mortgage.
On residential properties with six or fewer dwelling units (each with its own kitchen), the lender pays. The statute is explicit that this tax “shall not be paid or payable, directly or indirectly, by the mortgagor.”1New York State Senate. New York Tax Law 253 – Recording Tax That language blocks lenders from disguising the charge as a closing fee, adjusting the rate to recover it, or otherwise pushing the cost back onto the borrower. Sections 258 and 259 carve out narrow exceptions, but the general rule holds firm on small residential deals.
On everything else, the borrower pays. Commercial properties, apartment buildings of seven or more units, mixed-use developments, and vacant land all put the special additional tax on the mortgagor.1New York State Senate. New York Tax Law 253 – Recording Tax On a $5 million commercial loan, that’s $12,500 in special additional tax alone, before the basic and additional taxes are added in.
When a qualifying nonprofit is on one side of the transaction, the burden shifts to the non-exempt party. If the nonprofit is the borrower, the lender pays. If the nonprofit is the lender, the borrower pays. When both parties are exempt, the tax doesn’t apply at all.1New York State Senate. New York Tax Law 253 – Recording Tax
When the Tax Does Not Apply
A mortgage is exempt from the special additional tax when two conditions are both true:
- The mortgagee is a natural person (an individual human being, not a corporation, LLC, or bank) or a credit union.
- The property has six or fewer separate residential units, each with its own cooking facilities.
Both conditions have to be satisfied. A natural person lending on a seven-unit building still owes the tax. A bank lending on a two-family home still owes it, though in that case the lender is the one writing the check anyway.1New York State Senate. New York Tax Law 253 – Recording Tax The exemption is built to shield small private residential lending while keeping institutional and commercial lending fully within the tax.
Nonprofits can also claim exempt status. The organization must operate on a nonprofit basis with no earnings benefiting any officer, director, or member, and it must hold a federal tax exemption under Section 501(a) of the Internal Revenue Code.1New York State Senate. New York Tax Law 253 – Recording Tax The recording officer will require a separate affidavit setting out the basis for the exemption, so that documentation should be ready before closing.
How to Avoid Paying Twice on a Refinance
Refinancing a New York mortgage the naive way triggers a fresh round of recording taxes on the full new loan amount. That’s an enormous and usually avoidable cost. Tax Law Section 255 provides the escape: when a supplemental mortgage is recorded to correct, modify, or extend an existing mortgage on which all recording taxes have already been paid, no additional tax is owed on the previously taxed debt. Tax applies only to new or further indebtedness beyond what the original mortgage secured.3New York State Senate. New York Tax Law 255 – Supplemental Mortgages
The mechanism is a Consolidation, Extension, and Modification Agreement, or CEMA. Rather than paying off the old mortgage and recording a new one, the new lender takes an assignment of the existing mortgage from the old lender, then the two are consolidated into a single lien. Recording tax hits only the new money. Refinance a $600,000 balance into a $700,000 loan and the tax base is $100,000, not $700,000. On that example, you avoid roughly $1,500 in special additional tax and considerably more once the basic and additional layers are added.
A CEMA needs cooperation from the existing lender, some of whom charge assignment fees, and the paperwork is heavier than a plain refinance. On any refinance with a substantial existing balance, the tax savings still tend to swamp the extra costs. Skipping the CEMA is one of the more expensive mistakes New York borrowers make.
Filing, Payment, and Recovering the Tax When the Wrong Party Pays
Outside New York City, mortgages are recorded and the tax is paid through the County Clerk. Inside the five boroughs, the City Register handles Manhattan, Brooklyn, Queens, and the Bronx; Staten Island recordings go through the Richmond County Clerk.4NYC Department of Finance. Recording Documents5New York State Archives. Real Property Records Pathfinder Payment is due when the mortgage is submitted for recording. The recording officer endorses the document to confirm the tax was paid, and that endorsement is the legal proof of compliance.
If the borrower isn’t liable but needs a discharge or release of the mortgage, Section 258 lets the borrower pay the tax out of pocket and then sue the lender to recover the money as a personal debt.6New York State Senate. New York Tax Law 258 The provision exists because an unpaid special additional tax can block a mortgage from being properly discharged, leaving the borrower stuck even when the lender was the one who owed. Anyone in that position should pay the tax, keep the receipt, and pursue reimbursement.
What Late or Unpaid Tax Costs
Recording a mortgage without paying the correct tax triggers interest and, in New York City, a penalty. Interest accrues on the unpaid balance at the rate set by the Department of Taxation and Finance, compounded daily. For the second quarter of 2026, the rate for mortgage recording tax underpayments is 10% per year.7New York State Department of Taxation and Finance. Interest Rates: 4/1/2026 – 6/30/2026
For New York City properties, an additional penalty applies when the recording officer could not determine from the face of the instrument that tax was due: 10% of the tax owed for the first month of delay, plus 2% for each additional month, capped at 25%.8Legal Information Institute. 20 NYCRR 653.2 – Interest and Penalties The Commissioner of Taxation and Finance can cancel the penalty (though not the interest) if the mortgage was recorded in good faith and the recording officer initially treated it as non-taxable or taxable at a lower amount.
Federal Tax Treatment
Mortgage recording taxes are not deductible as real estate taxes on a federal return. The IRS treats them as transfer or stamp taxes, which are excluded from the real estate tax deduction. A buyer who pays recording taxes at closing can add them to the property’s cost basis, which reduces taxable gain on a later sale. A seller who pays them reduces the amount realized on the sale.9Internal Revenue Service. Publication 530, Tax Information for Homeowners
For an owner-occupant selling a primary residence within the home sale exclusion, the basis adjustment usually doesn’t change the tax outcome. For investors and commercial owners, every dollar of recording tax paid at closing is worth tracking.