Good Question: What’s the reason for NY’s Mortgage Tax?
ROCHESTER, N.Y. (WHEC)— It’s no secret the housing market around Rochester has been hot in recent months. A big part of that has to do with limited supply leading to more competition for people looking for new homes.
With bidding wars driving up prices, every cent counts. Also, don’t forget about closing costs. New York has some of the highest in the country.
A viewer named Dan had a question about them and reached out to News10NBC’s Brennan Somers saying: NY has a 1.25% tax on your total amount borrowed for a mortgage. This tax is hidden in the closing costs and can be fairly substantial… How/when was this tax incorporated and was there any specific reason for this tax?
Somers took those questions to the NYS Department of Taxation and Finance. Officials there told Somers this concerns the Mortgage Recording Tax. It used to be a federal fee until the state took it over about 60 years ago. It started out a just the basic tax which is 50 cents per $100 on the total amount secured by the mortgage.
Over the years, more taxes have been added to it. A portion goes to the state mortgage agency and another piece is set aside for transportation districts.
In Monroe County, there’s also a 25 cent per $100 dollar county tax. Add it all up and that’s how you get the current rate of 1.25 for the local MRT.
The state says you have to pay this tax for the “privilege of recording a mortgage on real property.” That rate isn’t the same for every home buyer in NY
You can check your county’s here.
Watch previous Good Question segments here. If you have a question you’d like answered, email GoodQuestion@whec.com.