Have you mortgaged a property this year? If so, you might be entitled to take the New York State Special Additional Mortgage Recording Tax Credit.
New York State imposes a tax on the privilege of recording a mortgage on real property located within the state. Some or all of the following tax rates make up the recording tax, depending on the county in which the property is located:
- Basic tax of 50 cents per $100 of mortgage debt or obligation secured
- Special additional tax of 25 cents per $100 of mortgage debt or obligation secured
- An additional tax of 25 cents per $100 of the mortgage debt or obligation secured (30 cents per $100 for counties within the MCTD). The recording of a mortgage is subject to the additional tax, unless the additional tax has been suspended in the county where the real property is located.
- City or county mortgage tax of 25 to 50 cents per $100 of mortgage debt or obligation secured, where applicable
The New York State tax credit is for the amount of special additional mortgage recording tax (#2 above) paid. In some cases, the tax credit can be significant. For example, if you recorded a mortgage for $1 million on property located in a county that imposes the special additional mortgage recording tax, you are entitled to a credit of $2,500 on your New York State tax return.
The special additional mortgage recording tax can be paid by the lender or borrower depending on who paid the tax; however, it is typically paid by the borrower. Only some counties impose the special additional mortgage recording tax, including but not limited to Dutchess, Cayuga, Erie, Monroe, Montgomery, Niagara, Oswego, Saratoga, Seneca, and Ulster. Refer to the Form MT-15 instructions for a complete listing of the counties that impose the special additional mortgage recording tax.
Exception: The tax credit is not allowed for the special additional mortgage recording tax paid on residential mortgages if the property is located in Erie county or any of the counties within the Metropolitan Commuter Transportation District (MCTD). For purposes of this credit, a residential mortgage is a mortgage of real property principally improved by one or more structures containing a total of not more than six residential dwelling units, each with its own separate cooking facilities.
This is a refundable tax credit of the amount paid for the special additional mortgage recording tax paid at closing. The credit can be claimed by individuals (including sole proprietors), partnerships, S corporations, estates, and trusts that recorded a mortgage on real property located in New York State. Individuals, partnerships, estates and trusts claim the credit on NYS Form IT-256. S-corporations claim the credit using NYS Form CT-45.
The total amount of the mortgage recording tax paid is typically included on the loan closing statement. It is advised that the taxpayer request a breakdown of the mortgage recording tax paid from the title company to verify exactly which New York State mortgage recording taxes were imposed.