In a buyer's market, new condo developers try to sweeten the deal by offering to pay some of the closing costs. In the current market, that's more of the rule rather than the exception, especially for luxury condos, with more extreme incentives being offered than in the past.
Even if you're in the market for a new condo that doesn't fall into the luxury category (above $3 million), you can find developers offering to pay transfer taxes and/or mansion taxes in order to seal the deal.
Transfer taxes are levied by both New York City and New York State. For the city, if the value of the property is $499,999 or less, the tax is 1 percent of the purchase price. For properties sold at $500,000 and up, the tax rises to 1.425 percent.
For the state, it is calculated at a rate of two dollars for every $500, or fractional part. The rate increases to 0.65 percent for residential transactions greater than $3 million.
Mansion taxes are applied to properties that sell for $1 million and up, and as of July, are now based on a sliding scale. They can range from 1 percent for homes between $1 million and $2 million all the way up to 3.9 percent for properties over $25 million.
These fees can often add tens of thousands of dollars to the purchase price of an apartment.
“In a strong market, developers of new condos will shift this expense to the buyer,” says Andrew Sacks, a broker with Citi Habitats. “But in today’s soft market, there’s a lot more negotiability. It’s currently not uncommon for the developer to pay—or at least split—these charges with the new buyer.”
Developers are getting increasingly creative when it comes to the concessions that they will offer buyers these days. Some are offering to cover common charges and/or real estate taxes for a number of years, free gym memberships, and complimentary storage lockers.
“Offering these incentives allows the developer to create a sense of value and provide a cost savings to buyers while maintaining a higher official purchase price,” Sacks says. “The city records the closing price of an apartment without taking into account these concessions. Because of that, potential buyers don’t see units selling for steep (or any) discounts—thus making the building look more desirable.”
Here are five new New York City condos—all priced under $1.4 million (some are a fraction of that price)—where the sponsor is offering to pay the transfer tax and other closing costs.
364 Harman St., #2C, Bushwick
Following a recent $21,000 price reduction, this 575-square-foot, one-bedroom, one-bath condo (also pictured at top) is now listed for $549,000. Features include oak floors, high ceilings, ductless A/C and heating, built-in Bluetooth speakers, and in-unit laundry. There are stainless steel appliances and a waterfall countertop island in the kitchen. It’s located in The Harmony, a 16-unit boutique elevator condo building with a fitness center, parking garage, furnished roof deck, storage units, and bike storage. The sponsor will pay the transfer tax for all accepted offers received before January 31. Common charges are $355 a month. Taxes are $497 a month.
505 West 43rd St., #7S, Clinton
Listed for $865,000, this 451-square-foot studio has white oak plank flooring, Italian cabinetry and white honed quartz countertops in the kitchen, and in-unit laundry. The apartment is in Charlie West, a condo building with a 24-hour doorman, a manicured garden, a fitness center, a children’s playroom, an indoor and outdoor pool, a bike-sharing facility, and a furnished terrace. Common charges are $470 a month. Taxes are $397 a month. Sponsor will pay transfer tax.
121 East 22nd St., #N503, Gramercy Park
Priced at $1,310,000, this 616-square-foot alcove studio has a walk-in closet, in-unit laundry, and polished quartz countertops in the kitchen. It’s located in an 18-story condo building with an indoor pool, landscaped courtyard, indoor/outdoor residents’ lounge, rooftop terrace with a fire pit and grill, fitness center, screening room, and children’s playroom. There’s also an automated indoor parking system, bike storage, private storage, 24/7 attended lobby, and concierge services. Common charges are $656 a month. Taxes are $1,334 a month. Sponsor will pay transfer tax and mansion tax on full-price offers.
27 Kossuth Pl., #4C, Bushwick
With a recent $24,000 price drop, this two-bedroom, two-bath condo is now listed for $715,000. Features include white oak floors, a balcony, in-unit laundry, and open kitchen with stainless steel appliances. It’s located in a newly constructed condo building with a lounge and private storage units. Common charges are $314 a month. Taxes are $472 a month. The sponsor will pay the transfer tax and sponsor attorney fees.
267 Ainslie St., #PH, Williamsburg
The asking price of this this three-bedroom, two-bath duplex was recently slashed. The unit, which is now listed for $1,399,000, has hardwood flooring, stainless steel appliances in the kitchen, custom lighting, in-unit laundry, a terrace off the living room, and a private roof deck. It’s located in a brand-new, five-unit building. Common charges are $509 a month. Taxes are $799 a month. The sponsor will pay closing costs on offers at asking, which includes transfer tax and sponsor attorney fees.
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