The Nassau County mortgage recording tax is 1.05% of the loan amount, charged every time a mortgage is recorded against real property in the county. On a $500,000 mortgage, that comes to roughly $5,220. State law splits the bill between borrower and lender, and the same rate applies whether you are buying a home, refinancing, or financing commercial property.
What Makes Up the 1.05%
The rate is not one tax. New York Tax Law Section 253 stacks three separate levies:
- Basic tax of 0.50% (50 cents per $100 of principal).
- Special additional tax of 0.25%, imposed on mortgages from institutional lenders like banks on residential property with six or fewer units.
- Additional tax of 0.30%, collected because Nassau County sits inside the Metropolitan Commuter Transportation District.
Together they produce 1.05%. One narrow case brings the rate down to 0.80%: when the lender is a natural person (a family member holding a seller-financed note, for example) or a credit union, and the property has six or fewer residential units, the 0.25% special additional tax drops off entirely.1New York State Senate. New York Tax Law 253 – Recording Tax
Who Pays What
State law does not put the whole bill on the borrower. For mortgages on residential property with six or fewer units, Section 253(1-a) requires the lender to pay the 0.25% special additional tax.1New York State Senate. New York Tax Law 253 – Recording Tax The borrower covers the 0.50% basic tax and the 0.30% additional tax.
Borrowers on one- or two-family homes also get a small break: the first $10,000 of principal is excluded from the additional tax calculation, saving about $30.
For commercial properties and larger multifamily buildings, that statutory split does not apply the same way. The parties can negotiate who bears the tax, and the full 1.05% is commonly charged to the borrower in commercial deals.
A $500,000 Example
Take a $500,000 mortgage on a single-family home in Nassau County with a bank lender:
- Basic tax: $500,000 × 0.50% = $2,500
- Special additional tax: $500,000 × 0.25% = $1,250 (paid by the lender)
- Additional tax: ($500,000 − $10,000) × 0.30% = $1,470
- Total tax: $5,220
The borrower writes a check for $3,970. The lender absorbs $1,250.1New York State Senate. New York Tax Law 253 – Recording Tax If the property were not a one- or two-family residence, the $10,000 exclusion would not apply, and the additional tax would be $1,500 instead of $1,470.2New York State Department of Taxation and Finance. Mortgage Recording Tax
Refinancing: Use a CEMA to Avoid Paying Twice
This is where the real money gets saved or wasted. Refinance a Nassau County mortgage the ordinary way and the old loan is paid off, a brand-new mortgage is recorded, and you owe 1.05% on the entire new balance. You already paid tax on most of that balance when you bought the property, but the county does not care. On a $400,000 refinance, that is more than $4,000 you could avoid.
A Consolidation, Extension, and Modification Agreement, known as a CEMA, prevents the double hit. Under New York Tax Law Section 255, when an existing mortgage is modified or extended rather than discharged and replaced, recording tax is owed only on new money added to the existing balance.3New York State Senate. New York Tax Law TAX 255 – Supplemental Mortgages If your current balance is $380,000 and your new loan is $400,000, you pay tax on the $20,000 gap, not the full $400,000.
A CEMA requires cooperation from both the existing lender and the new lender, plus a sworn statement filed with the county clerk confirming the tax was already paid on the original balance.3New York State Senate. New York Tax Law TAX 255 – Supplemental Mortgages The process runs longer than a standard refinance closing because the old lender must assign the mortgage rather than release it. Your attorney and title company handle the paperwork; expect a few extra weeks. The savings almost always justify the wait.
Who Does Not Pay
Reverse Mortgages
Reverse mortgages that comply with New York Real Property Law Sections 280 or 280-a are fully exempt. The lender must attach documentation in a format approved by the state tax commissioner so the recording officer can confirm the mortgage qualifies.4New York State Senate. New York Tax Law TAX 252-a Without that documentation, the tax is calculated on the loan proceeds the lender is obligated to advance, excluding interest that may be added to the balance over time.
Government Agencies and Qualifying Nonprofits
Entities with tax-exempt status, including government bodies and qualifying nonprofits, can avoid the standard assessment when they are the mortgagor or mortgagee. Proof of exempt status must be submitted at the time of recording.
Co-op Share Loans
Buyers of cooperative apartments catch a real break. A co-op purchase involves buying shares of stock in a cooperative corporation rather than acquiring real property directly. The loan is secured by a UCC-1 filing against those shares, not by a mortgage recorded against land. No mortgage recording means no mortgage recording tax, which can save thousands compared to buying a similarly priced condo or single-family home.
What Happens If the Tax Is Not Paid
Skipping or underpaying the mortgage recording tax carries consequences far beyond a late fee. Under New York Tax Law Section 258, no court will issue a judgment to foreclose or enforce a mortgage until the recording tax has been fully paid.5New York State Senate. New York Tax Law TAX 258 – Effect of Nonpayment of Taxes The mortgage also cannot be released, discharged, or received as evidence in any legal proceeding while the tax remains outstanding. In practical terms, the lien is nearly unenforceable.
Penalties begin immediately. When a mortgage is recorded without proper payment, the state adds 0.5% of the unpaid tax for each month or partial month it remains outstanding.5New York State Senate. New York Tax Law TAX 258 – Effect of Nonpayment of Taxes If the underpayment was not obvious from the face of the instrument, the penalty rate doubles to 1% per month. The commissioner of taxation and finance has authority to reduce penalties when a mortgage was recorded in good faith and later determined to owe additional tax, but counting on that leniency is not a sound strategy.
Is the Tax Deductible on Your Federal Return?
No. The IRS classifies transfer and stamp taxes as settlement costs that cannot be deducted as real estate taxes.6Internal Revenue Service. Publication 530, Tax Information for Homeowners The mortgage recording tax you pay is added to the cost basis of your property instead. That higher basis reduces your taxable gain when you eventually sell at a profit, but it gives you no deduction in the year you pay it.