Real estate in NYC is expensive and closing costs for sellers can be substantial. The average price of a condominium apartment in Manhattan in 2018 was $2,880,000 and closing costs paid by sellers can reach 8% of the sale price. This post will discuss typical condominium closing costs for sellers in New York City. For condo purchaser’s closing costs click here.
NYC Condo Closing Costs
Closing costs for sellers of a condominium apartment in New York typically range from 8% to 10% of the purchase price. At the closing sellers typically have to pay for real estate broker commissions, NYC and NY State Transfer Taxes, building fees and attorney fees.
Real Estate Commission
The Real Estate Brokers’ Commission is usually the largest expense for the sellers of apartments in New York. It is typically 6% of the purchase price,paid by the seller and split between the seller’s broker and purchaser’s broker. The brokers’ commission percentage is always fully negotiable, and should be negotiated with the brokers prior to hiring them. We also suggest our clients to negotiate things like duration of the agreement, termination rights, how the commission would be paid in case the seller themselves procure a purchaser, etc.
The New York State Transfer Tax is 0.4% of the purchase price up to $3,000,000. For transactions over $3,000,000 The New York State Transfer Tax is 0.65%.
The New York City Transfer Tax is 1% of the purchase price for transactions of $500,000 or less and 1.425% for transactions above half a million.
Most management companies and condo boards charge sellers closing fees, move out fees, etc. In rare cases condominiums may impose a “flip tax” on the sellers. It is not a real tax but a fee charged by the condominium itself. Usually this fee is a percentage of the purchase price and can be as high as a few percent. You should obtain a list of all condo closing fees prior to listing your apartment for sale.
Foreign sellers are subject to FIRPTA. Under the Federal Withholding Tax (FIRPTA) 10% of the purchase price for properties between $300,000 and $1,000,000 and 15% of the purchase price for properties over $1,000,000 is withheld if the seller is a non-exempt foreigner. FIRPTA is not a tax but a withholding. Seller’s actual tax liability will be determined once the seller files his or her tax returns. In a lot of cases we can help our foreign clients lower the amount due at the time of sale under FIRPTA by obtaining a Withholding Certificates from IRS prior to the closing.
Real Estate Attorney Fees
Rates for real estate lawyers in New York vary and are based on the attorney’s experience, location, services included, etc. Most real estate attorneys in NYC charge a flat fee for residential condominium closings. If your attorney is charging you an hourly rate for a residential condo closing make sure to obtain an estimate from him or her in advance. A lot of lawyers focus on specific areas of law. Before retaining an attorney always ask them about their experience and whether they have closed similar deals in the past. It is also recommended to discuss all of the fees prior to retaining a lawyer.