N.Y. Comp. Codes R. & Regs. tit. 20 § 642.4

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

Section 642.4 - Imposition of the City of New York tax

Tax Law, § 253-a, Administrative Code of the City of New York, §§ 11-2601(d), 11-2601(e)

(a)

(1) In addition to the taxes imposed by subdivisions 1, 1-a and 2 of section 253 of the Tax Law, section 253-a of the Tax Law authorizes the City of New York to impose the City of New York tax upon the recording of each mortgage on real property located in whole or in part within such city. Section 11-2601 of the Administrative Code of the City of New York imposes such tax.

(2) The rate of tax for each $100 and each remaining fraction thereof of principal debt or obligation which is, or under any contingency may be secured at the date of execution thereof or at any time thereafter is as follows:

(i) Where the amount of such principal debt or obligation is less than $500,000 the rate of tax is one dollar.

(ii) Where the amount of such principal debt or obligation is $500,000 or more and the mortgage is of real property consisting only of a one-, two- or three-family house or an individual residential condominium unit the rate of tax is one dollar and 12 1/2 cents. For purposes of determining whether the mortgage is of real property consisting only of a one-, two- or three-family house or an individual residential condominium unit, the nature of the property as of the date that the mortgage is executed must be used.

(iii) Where the amount of such principal debt or obligation is $500,000 or more and the mortgage is of real property which consists of other than a one-, two- or three-family house or an individual residential condominium unit the rate of tax is $1.75.

(b)Proof required.

(1) Whenever a mortgage of real property located in New York City is recorded and the amount secured by the mortgage is $500,000 or more, and is it is being claimed that the real property consists only of a one-, two-, or three-family house or an individual residential condominium unit, there shall be submitted, either in the mortgage instrument or by separate affidavit by the mortgagor, the mortgagee or by any person who has knowledge of the facts, a statement that the real property consists of such type of residential property.

(2) A statement in the mortgage that the real property is improved by a one-, or two-family residence or dwelling, sufficient to claim the $10,000 deduction from the additional tax, as provided in section 642.2(b)(2) of this Part, is sufficient to satisfy the proof requirements of this subdivision.

(c)Determination of the applicable rate of the City of New York tax on related transactions.

(1) The principal debt or obligation which is, or under any contingency may be secured at the date of execution or at any time thereafter of a mortgage on real property located in such city, shall be aggregated with the principal debt or obligation which is, or under any contingency may be secured at the date of execution or at any time thereafter of any other mortgage on real property located in such city, where such mortgages:

(i) form part of the same or related transactions; and

(ii) have the same or related mortgagors.

(2) If the commissioner finds that a mortgage transaction or mortgage transactions has or have been formulated for the purpose of avoiding or evading a rate of tax as provided under subdivision (a) of this section, in excess of the lowest such authorized rate, rather than solely for an independent business or financial purpose, the commissioner shall treat all of the mortgages forming part of such transaction or transactions as a single mortgage for the purpose of determining the applicable rate of tax.

(3) It shall be presumed that all mortgages offered for recording within a period of 12 consecutive months having the same or related mortgagors are part of a related transaction, and shall be treated as a single mortgage for the purpose of determining the applicable rate of tax. Such presumption may be rebutted only with clear and convincing evidence to the contrary.

(4) The term related, when used in this subdivision with reference to mortgagors, shall include but not be limited to:

(i) members of a family, including spouses, ancestors, lineal descendants, and brothers and sisters (whether by whole or half blood);

(ii) a shareholder and a corporation where more than 50 percent of the value of the outstanding stock of such corporation is owned or controlled directly or indirectly by such shareholder;

(iii) a partner and a partnership where more than 50 percent of the capital or profits in such partnership is owned or controlled directly or indirectly by such partner;

(iv) a beneficiary and a trust where more than 50 percent of the beneficial interest in such trust is owned or controlled directly or indirectly by such beneficiary;

(v) two or more corporations, partnerships, associations, or trusts, or any combination thereof, which are owned or controlled, either directly or indirectly, by the same person, corporation or other entity, or interests; and

(vi) a grantor of a trust and the trust.

(d) Except as otherwise provided in these regulations, the City of New York tax is administered and collected in the same manner as the basic tax described in section 642.1 of this Part.

(e) See section 645.2(d) of this Title for information on the recording of a supplemental mortgage created for the purpose of providing additional or further security for the payment of the principal debt or obligation secured by a prior recorded primary mortgage by spreading the existing lien of the prior recorded mortgage or imposing a new lien on real property located in the City of New York.

(f) Where real property covered by a mortgage subject to the tax described in this section is situated in whole within New York State but partly within and without the City of New York, the amount of City of New York tax due and payable upon the recording of the mortgage shall be determined in a manner similar to that described in section 642.2(d) of this part.

(g) Where real property covered by a mortgage subject to the tax described in this section is situated both within New York City and without New York State, the amount of City of New York tax due and payable shall be determined in a manner similar to that described in Part 649 of this Title.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 642.4