By Colin R. O'Leary
When selling a property in New York City it's important to consider the closing costs. Here's what to expect when selling a property in New York City.
Real Estate Commissions: This makes up the lion’s share of the closing costs when selling a home. Typical commissions range from 5-6% of the apartment/building price in NYC. These commissions are usually split evenly between a buyer’s agent and a seller’s agent.
Real Estate Attorney Fees: Most real estate attorney fees will generally range anywhere from $2,000-$5,000 for the transaction. Real estate attorneys in NYC typically charge you a flat fee upon the closing of the real estate transaction.
NYC & New York State Transfer Taxes for condos, co-ops, 1-3 family: The New York State transfer tax is 0.4% for homes sold under $3,000,000. and 0.65% for homes sold above $3,000,000. The NYC Transfer tax is 1% for home sold under $500,000, and 1.425% for home sold above $500,000. For example, if a home sells for $1,000,000 the total NYC & NYS Transfer tax would add up to 1.825%. For homes sold above $3,000,000 the total would be 2.075%. Investment properties (commercial, mixed use, 4 + unit) have a different scale regarding transfer taxes. See chart below for full details.
Captial gains tax: This applies to investment properties only. While this isn’t technically an itemized closing cost, it is certainly something you should consider. If you are selling your primary residence, you have lived there for 2 years or more, and are married, you can typically exclude the first $500,000 in capital gains and take them tax free. If you are single, it would be approximately half of that or $250,000.
When calculating your gain, it's best to speak to your accountant or financial advisor so the cost basis can be determined. There are options to help you avoid paying a hefty tax bill that comes from capital gains taxes, such as a 1031 exchange. A 1031 exchange allows a seller to reinvest the proceeds into a new property or into an approved fund that will help defer capital gain taxes.
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