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Bulletin: NY000661a

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Bulletin: NY000661a

Bulletin Document
V 2
Date: September 09, 2021
To: All New York State Agents, Office Counsel, and Managers
RE: Gross-Up of Transfer Tax on Residential Property Where Purchaser Pays NYS Transfer Tax (Tax Law 1404)

The purpose of this Bulletin is to clarify Bulletin 661, which was issued as a result of the amendment to NYS Tax Law 1404 which went into effect on July 1, 2021. One of the provisions of the amended law states:

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.

Under the law prior to July 1, 2021, where the grantee paid the NYS transfer tax, the amount of the transfer tax paid by the grantee would be included in the taxable consideration, and the NYS transfer tax would be “grossed up” accordingly.  Under the revised law, if the conveyance is of residential real property and the grantee pays the NYS transfer tax, the NYS transfer tax is no longer included as a part of the taxable consideration on the TP-584, and the ultimate NYS transfer tax to be paid by the grantee is no longer “grossed up” by the NYS transfer tax.

Any local transfer taxes (NYC, Yonkers, Peekskill, etc.) and other expenses that the grantee is paying on behalf of the grantor are still included in the taxable consideration on the TP-584 for the purposes of calculating the NYS transfer tax and mansion tax.  Further, nothing in the revised statute alters the way that the local transfer taxes are calculated.  If for example, the grantee is paying the NYC transfer tax on the grantor’s behalf, the NYS transfer tax is still included as taxable consideration for the purpose of calculating the NYC transfer tax.

A sample calculation is hyperlinked below.  We are currently working on a change to the Stewart Rate Calculator at www.stewartstar.com to reflect the appropriate changes.  A copy of the new law is included with this bulletin.

If you have any questions regarding this bulletin, please contact Stewart Title Insurance Company Legal Services at 212-922-0050.

Attachments: NY CLS Tax Law 1404; Sample Calculation

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References