N.Y. Comp. Codes R. & Regs. tit. 20 § 642.3

Current through Register Vol. 46, No. 45, November 2, 2024

Section 642.3 - Imposition of the special additional tax

Tax Law, § 253(1-a)

(a) In addition to the taxes imposed by subdivisions 1 and 2 of section 253 of the Tax Law, subdivision 1-a of section 253 of the Tax Law imposes the special additional tax upon the recording of each mortgage on real property located in this State, at a rate of 25 cents for each $100 and each remaining major fraction thereof of principal debt or obligation which is, or under any contingency may be secured at the date of execution of such mortgage or at any time thereafter.

(b)Residential-natural person exemption.

(1) Any mortgage of real property shall be exempt from the special additional tax if each of the following conditions is met:

(i) the mortgagee is a natural person; and

(ii) the mortgaged premises consist of real property improved by a structure containing six residential dwelling units or less, each with separate cooking facilities.

(2) For purposes of the residential natural-person exemption, a natural person means a human being, as opposed to an artificial person, who is the owner of a mortgage (mortgagee). A natural person does not include a corporation or partnership; natural person(s) operating a business under a "dba" (doing business as); an estate, such as the estate of a bankrupt or deceased person, or a trust. Therefore, natural person shall not include a person who is acting in a fiduciary capacity for a mortgagee who is not a natural person, such as an executor or executrix of an estate, a trustee of a trust, a partner of a partnership or a shareholder or officer of a corporation.

(3) Where exemption from the special additional tax is claimed, based on the exemption described at paragraph (1) of this subdivision, an affidavit must be submitted with the mortgage which sets forth that the mortgagee is a natural person and that the mortgaged real property as of the date of the recording of the mortgage is improved by a structure containing six residential dwelling units or less, each with separate cooking facilities. Such affidavit may be made by the mortgagor, the mortgagee or any other person who has knowledge of the facts related to the mortgage.

(c)Payment of tax.

(1)

(i) Except as provided in subparagraph (ii) of this paragraph, and paragraph (3) of this subdivision, the mortgagee must pay the special additional tax if any, in the case of any mortgage or real property which is principally improved or is to be principally improved by one or more structures containing in the aggregate six or fewer residential dwelling units, with each dwelling unit having separate cooking facilities unless the mortgagee is an exempt organization as described at section 501(a) of the Internal Revenue Code. Where the real property covered by the mortgage contains or will contain other improvements, the cost or fair market value of which are in excess of the cost or fair market value of such structure containing the residential dwelling units, the real property shall not be deemed to be principally improved by such structure containing in the aggregate six or less residential dwelling units.

(ii) In cases where the mortgagee is an organization which is organized other than for profit, which is operated on a non-profit basis and no part of the net earnings of which inures to the benefit of any officer, director or member and which is exempt from Federal income tax pursuant to section 501(a) of the Internal Revenue Code, and the real property covered by the mortgage is principally improved or is to be principally improved as described in this paragraph, the mortgagor must pay the special additional tax.

(2)

(i) Except as provided in subparagraph (ii) of this paragraph, and paragraph (3) of this subdivision, the mortgagor must pay the special additional tax in the case of a mortgage of real property which is not principally improved or will not be principally improved by one or more structures containing in the aggregate six or less residential dwelling units, with each dwelling unit having its own separate cooking facilities.

(ii) In cases where the mortgagor is an exempt organization as described in subparagraph (1)(ii) of this subdivision, and the real property covered by the mortgage is not principally improved or will not be principally improved as described in this paragraph, the mortgagee must pay the tax.

(3) If both the mortgagor and mortgagee are exempt organizations as described in subparagraph (1)(ii) of this subdivision, no special additional tax shall be imposed upon the recording of the mortgage.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 642.3