I think I’ll make a mint if I sell, but what taxes do I have to pay?
Nothing is more fun than helping a happy seller count their Madisons.
But there are some taxes and fees to be paid. Here’s a list with help from my sponsoring broker Gil.
I tried to put them in size order, because I’m that way.
#1) Capital gains. This is on your profit — the price you’re selling at, minus the price you bought at, and any money you’ve spent on renovations, and your closing costs. The first $250,000 of profit is exempt, $500,000 if you’re a married couple. The rate varies depending on your bracket, but 20% is a good guess as to what you’ll pay.
#2) Real estate broker fee: negotiable. Of course you are happy to pay this because I made you so much money.
#3) New York City Transfer Tax: varies from 1% to 2.425% of purchase price.
Think of it in tiers: 1% of gross purchase price, if the price is anything up to $500,000;
If the purchase price is over $500,000, 1.425% of the entire purchase price;
If the purchase price is over $1,000,000, an additional 1% “mansion tax” kicks in, so you’re paying 2.425% of the entire purchase price.
#4) Co-op flip tax : 1% to 3% of purchase price or 5% of profit (varies by building)
#5) New York State Transfer Tax: $2 per $500 of purchase price (in normal terms, 0.4%)
#6) Seller’s Attorney: $1,000 and up
#7) Other people’s attorneys. The co-op or managing agent will be repped by somebody, who will probably cost around $500; and you’ll have to pay off your mortgage as part of the sales process, so you’ll have to pay your lender’s attorney around $400.
#8) Stock transfer tax: $0.05 per share
#9) UCC-3 filing fee: $50
Still confused? Here’s a link to Carter Ledyard, a lawyers’ site I think is particularly clear.