Closing costs in New York

Closing costs are a confusing part of homebuying, with fees that vary by your state, your city and even the property you plan to buy.

New York State comes in second for most expensive closing costs — not surprising, given it also boasts some of the most expensive real estate nationwide. In the Empire State, homebuyers must cough up between 2.57% and 3.21% of their property’s purchase price to cover closing.

Average closing costs in New York

Across the state, the average home sale price is between $400,000 and $500,000. If you buy a home in that price range, the average closing costs before taxes are $5,612. These fees pay for processing, appraisal and recording fees, plus title insurance, municipal searches and more.

New York is also notorious for its taxes, and real estate is no exception. If you live in the city, you face property taxes and the New York City mortgage tax — which can be anywhere from 1.80% to 2.80% of your purchase price — resulting in about $12,847 in closing costs after taxes.

New York City’s Mansion Tax

If you’re buying a home for $1 million or more in the Big Apple, your purchase is subject to the New York City mansion tax. It’s a mere 1% of your purchase price, but it ends up being no small tax. And you’ll end up paying it within 15 days of your closing.

Sellers don’t get away scot-free, either. If you’re the home seller, you pay fees as well as a New York State or New York City transfer tax.

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Who pays closing costs in New York?

In New York, closing costs are split between the buyer and the seller. These are the fees and taxes you can expect to pay when purchasing or selling a home. They apply across New York State and New York City, unless otherwise indicated.

How do closing costs in New York compare nationally?

New York has the second-highest closing costs in the country, trailing only Washington, DC. In terms of its closing cost-to-sale price before taxes, it’s fourth-highest out of the 50 states.

What to know about buying a house, condo or co-op in New York City

While closing costs for condos and homes are straightforward, co-ops are a different animal — and they make up 75% of housing in New York City.

Unlike condos and houses, co-ops are owned by a corporation. If you buy an apartment inside a co-op building, you’re not actually purchasing property: You’re buying shares of the corporation. In other words, you’re an investor — not an owner.

All of these factors affect closing costs for the buyer and the seller. As a seller, you’ll pay a flip tax, a stock transfer tax, a move-out fee and miscellaneous co-op fees, along with a slew of standard city and state fees, .

If you’re buying a condo, you’ll typically need to prove that you have the funds to cover up to two years’ worth of fees and mortgage payments after closing costs.

Bottom line

If you’re buying or selling property in New York, prepare to pay a lot at closing. The state has the second-highest closing costs in the country, with tax costs averaging more than $10,000.

While most closing costs are out of your control, you can save money by shopping around for an affordable mortgage that meets your budget.

• What is the New York City mansion tax?

  It’s a 1% tax on property purchases of $1 million or more in New York City. Paid by the buyer within 15 days of closing, it’s one of the many real estate oddities in the Big Apple.

• Does the mortgage recording tax apply to co-ops?

  No. The mortgage recording tax applies only to mortgages on “real” properties, like condos and homes. Because ownership for co-ops is more like shares, the tax doesn’t apply.

• What is a good-faith estimate?

  It’s an estimate that outlines the fees a buyer can expect to pay on a specific mortgage. Under the Real Estate Settlement Procedures Act (RESPA), lenders are required to provide buyers with a good-faith estimate of their closing costs within three days of receiving the mortgage application.