The tax on
the loan itself

Point 1How the tax works

When a mortgage on real property is recorded in New York City, tax is due: roughly 1.8% of the loan amount for residential mortgages of $500,000 or less, and about 1.925% above that, after the lender's customary quarter-point contribution is netted. On a $1.5 million loan, the buyer's share approaches $29,000 — payable at closing, on top of every other cost.

The tax attaches to the recorded loan, not the purchase: a bigger down payment shrinks it, and an all-cash purchase avoids it entirely. It is one of the few closing costs the buyer's financing decision directly controls.

Point 2The co-op exemption

Co-op loans are share loans, and shares are not real property.

Because a co-op buyer borrows against shares and a proprietary lease rather than real property, nothing is recorded against land — and the mortgage recording tax never applies. On a $1 million loan that is roughly $19,000 a condo buyer pays and a co-op buyer does not.

This quietly narrows the condo-co-op price gap for financed buyers. Comparing similar apartments across the two forms, the recording tax belongs in the model alongside price and monthlies — it is one of the co-op's few built-in financial advantages.

Point 3CEMA: splicing an old loan into a new one

On refinances — and sometimes on purchases — New York permits a Consolidation, Extension and Modification Agreement: the existing mortgage is assigned and consolidated into the new loan, and tax is paid only on new money above the old principal. A $900,000 refinance of an $850,000 balance pays tax on $50,000, not $900,000.

A purchase CEMA does the same between the seller's outstanding mortgage and the buyer's new one, splitting savings between the parties. Both flavors need cooperative lenders, add legal fees and weeks, and pencil only when the tax saved comfortably exceeds the friction — which on larger balances it usually does. Ask both lenders early; a CEMA cannot be retrofitted at the closing table.

Point 4Planning around it

Three levers exist: borrow less (each dollar of loan carries ~1.9 cents of tax), buy co-op rather than condo where the rest of the comparison is close, or structure a CEMA where an old loan can be spliced. Delayed financing — closing cash, borrowing later — does not escape it; the later loan records and is taxed then.

Like the mansion tax, it is knowable to the dollar before you offer. The buyers it surprises are the ones who modeled a down payment and forgot the state taxes the borrowing itself.