Transfer tax for new condos - seller or buyer pays

Buyer pays the transfer tax buying the condoe from the sponsor of a new building. BUT it is negotiable and can be payed by the sponsor if you negotiate for them to pay closing costs.

Just looking at the last 200 Manhattan condo sales on SE, the odd amounts (meaning buyer paid) are sponsor sales. The even amounts (i.e., seller paid) are resales. There may be a few exceptions in there.

A friend just purchased new construction. The sponsor paid the transfer tax as part of the negotiation because they didn't want to cut the price.

Not that I'm so experienced in this area, but when you make your offer, if the seller insists on you paying the transfer tax, say that your offer is $X, but that the $X includes all of the transfer tax. That way you can compare apples to apples in your own mind when you examine whether it's a good deal compared to similar real estate. I can't imagine a seller refusing an offer simply based on the semantics used to describe how much somebody is willing to pay.

Strangely enough, many of the sponsor deals I have seen -- with very plain vanilla renovations -- are 10-20% more than comparable non-sponsor units in the same building, and on top of the 10-20%, the sponsor expects the buyer to pay all of the sponsor's costs, including at a minimum transfer taxes and attorneys fees. Especially for condos, I don't get it -- many of the resales are much nicer renovations, and board approval is not really a problem. Perhaps the sponsor doesn't have a need for quick cash and is willing to wait for the market to come back?

Don't forget you also pay the sponsors attorney fee....if you don't try and get them to pay.

Its case by case and I'm seeing that being a negotiated quite often. Buyers that are getting great deals are usually paying the transfer tax and vice versa. It really depends on the overall deal. sunny.hong@bankofamerica.com

Just factor it into the overall purchase price you negotiate, in particular when comparing it to resales where there would never be an expectation that buyer pays. It works out to be slightly cheaper overall if you just reduce the purchase price to reflect that the buyer will pay the transfer taxes (that way transfer taxes aren't owed on the delta reflecting the reduced purchase price), but I've also found that most sponsors are now willing to pay the transfer taxes so that their sales look like they went closer to list price.

The transfer taxes in NYC are significant, I'm not sure if individual sellers would agree to reduce the sale price and have the buyer cover these costs, or even pay other things like brokers' fees. It would increase the amount of upfront cash that is required from the buyer and presumably isn't something that would be financed, but might be something to discuss with the seller because if you reduce the purchase price and thus the transfer taxes leaving the system are reduced, those are savings that you can both share and help you get closer to reaching a deal.

"A friend just purchased new construction. The sponsor paid the transfer tax as part of the negotiation because they didn't want to cut the price."

Ironic because one of the reasons Sponsors started doing this was to make the pirces seem lowere than they actually were.

PS This is one of the areas where having an experienced and knowledgeable about the current market Broker can help you: they will know from other deals which Sponsors are doing what in terms of give-backs, upgrades, etc.