September 28, 2026 · 5 min read

NYC transfer taxes on commercial property: what sellers and buyers pay

Selling a commercial property in New York City triggers two transfer taxes, one to the city and one to the state. Together they can take more than 3% of the price, which makes them one of the largest closing costs in any NYC sale. Buyers who finance the purchase face a third tax on the mortgage.

This guide explains who pays each tax, how the rates work, and the details that trip people up. It is general information, not tax or legal advice: confirm your numbers with a real estate attorney or accountant before you sign a contract.

The two transfer taxes

Tax Commercial rate Paid by
City: Real Property Transfer Tax (RPTT) 1.425% up to $500,000, 2.625% above Seller, by default
State: Real Estate Transfer Tax (RETT) 0.4%, or 0.65% at $2 million and up Seller, by default

Both taxes are charged on the consideration, which is the price paid for the property, including any existing mortgage the buyer takes over.

The city tax (RPTT)

For commercial property, the city rate is 1.425% when the consideration is $500,000 or less and 2.625% when it is more than $500,000.

The higher rate is not marginal. Once the price passes $500,000, 2.625% applies to the entire price, not just the part above the threshold. A sale at exactly $500,000 owes $7,125 in city tax; a sale a dollar higher owes about $13,125.

"Commercial" here means anything that is not a one to three family house, an individual residential condo unit or a co-op apartment. Office buildings, stores, warehouses, development sites and larger apartment buildings generally pay the commercial rates. Confirm the classification for a mixed-use property with your attorney.

The state tax (RETT)

The base state rate is 0.4% of the consideration (the statute puts it as $2 for every $500). In New York City, a commercial sale of $2 million or more pays an extra 0.25%, for 0.65% in total. As with the city tax, the higher rate applies to the whole price once the threshold is met.

The state's "mansion tax" of 1% or more applies only to residential purchases of $1 million or more, so it does not apply to commercial property.

Worked examples

Three sales of commercial property in New York City, using the rates above:

Sale price City tax State tax Total
$400,000 $5,700 $1,600 $7,300 (1.8%)
$1.5 million $39,375 $6,000 $45,375 (3.0%)
$5 million $131,250 $32,500 $163,750 (3.3%)

The $400,000 sale pays the lower city rate and the base state rate. The $1.5 million sale crosses the city threshold, so 2.625% applies to the whole price. The $5 million sale also crosses the state threshold for 0.65%.

For most commercial sales in the city, a working estimate of a little over 3% of the price for transfer taxes is reasonable, before any exemptions.

Who actually pays

By law, the seller pays both transfer taxes. The contract can shift them, and in practice the split is part of the negotiation. If the seller does not pay, or is exempt, the buyer becomes responsible for the tax, which is one reason buyers' attorneys pay close attention to how the taxes are handled at closing.

Both taxes are usually paid at the closing through the title company, with the city return filed electronically and the state form filed alongside it.

Transfers that are not deeds

Transfer taxes are not limited to a simple deed from seller to buyer. Watch for these cases:

  • Entity transfers. Many commercial properties are owned by an LLC or partnership. Selling a controlling interest (generally 50% or more) in an entity that owns New York real estate is taxed much like selling the property itself.
  • Long leases. A ground lease or other lease with a term of 49 years or more, counting renewal options, can be treated as a transfer and taxed.
  • Assumed mortgages. If the buyer takes over the seller's loan, the unpaid balance counts toward the consideration.

Some transfers are exempt or taxed at reduced rates, for example certain transfers to government bodies and some qualifying transfers involving real estate investment trusts. These rules are narrow, so get specific advice before counting on one.

Buyers who finance: the mortgage recording tax

A buyer who borrows to buy pays the mortgage recording tax when the loan is recorded. In New York City, the combined city and state rate on a commercial mortgage of $500,000 or more is 2.8% of the loan amount. On a $3.5 million loan, that is $98,000.

When the seller has an existing mortgage, buyers sometimes use a CEMA (consolidation, extension and modification agreement) to take over that loan and pay recording tax only on the new money borrowed. It needs the seller's lender to cooperate and adds legal work, so it pays off mainly on larger loans.

Other costs to budget for

Transfer taxes are the big line items, but a commercial sale has others:

  • Brokerage commission, usually paid by the seller and negotiated case by case.
  • Title insurance and recording fees, usually paid by the buyer.
  • Attorney fees on both sides.
  • Due diligence: surveys, environmental reports, building condition reports and zoning analysis for the buyer.
  • Adjustments at closing for real estate taxes, rents collected and security deposits held for tenants.

Planning a sale or purchase

  • Sellers: estimate transfer taxes early. At 3% or more of the price, they change your net proceeds and can influence how you price the property or structure the deal.
  • Buyers: check the contract language on who pays transfer taxes, and ask whether a CEMA is possible if the seller has a mortgage.
  • Both: if the property is held in an entity, talk to counsel about whether an entity sale or a deed transfer makes more sense. The tax is often similar either way, but other costs and risks are not.

Next steps

Where to look

The 6 neighborhoods Leasemark covers with the most office floor area, per NYC PLUTO tax lot data (26v2).

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