The Other Tax At Closing: What Nassau and Suffolk Buyers Pay to Record Their Mortgage
There is a second transfer tax hiding in your closing costs, and it has nothing to do with the mansion tax.
Most Long Island buyers know to budget for the mansion tax once a price crosses one million dollars. Fewer people know about the mortgage recording tax, a separate charge that shows up anytime you borrow money to buy a home here. It is not based on your purchase price. It is based on your loan amount.
What the tax actually is
The Suffolk County Clerk's office describes it plainly: mortgage tax is a one time tax paid when a mortgage is recorded, and it is separate from the property taxes you pay every year with your monthly payment. You pay it once, at the closing table, and then you never think about it again unless you refinance.
In Nassau and Suffolk, the combined rate works out to 1.05 percent of the loan amount. That number comes straight from a New York State Department of Taxation and Finance memo that lays out the rate county by county, and it confirms Nassau County and Suffolk County both sit at 1.05 percent, the same rate as Dutchess, Orange, and Putnam counties. Compare that to New York City, where the same memo puts the combined rate as high as 2.175 percent on residential mortgages of 500,000 dollars or more. If you are moving from an apartment in the city to a house on Long Island, this is one closing cost that actually gets cheaper.
Who pays and how the math works
The tax is split in a specific way. State law and the tax memo both lay out that the lender covers 0.25 percent of the special additional tax, and the rest lands on the borrower. On top of that, if your home is a one or two family residence, the first 10,000 dollars of your mortgage principal is exempt from the additional tax portion, a detail spelled out in the same state memo.
So what does this mean in real dollars. On a 500,000 dollar mortgage at 1.05 percent, you are looking at roughly 5,250 dollars due at closing, a figure that lines up with industry estimates for Nassau and Suffolk in that loan range. On a 750,000 dollar mortgage, the same math pushes that closer to 7,875 dollars. This is not a fee you can shop around or negotiate away. It is set by statute.
The one move that can lower your bill
If you are refinancing rather than buying fresh, there is a legal way to reduce what you owe. A Consolidation, Extension, and Modification Agreement, known as a CEMA, lets your new lender assign your old mortgage balance instead of paying it off and recording a brand new loan. Practitioners who handle these closings explain that you then pay mortgage recording tax only on the new money you are borrowing, not on the full new loan amount. This trick is more commonly discussed in the city, but the same CEMA mechanics apply to mortgages recorded in Nassau and Suffolk.
One more thing worth remembering: the mortgage recording tax is not optional and it is not the same line item as your state transfer tax or your mansion tax if your price crosses a million dollars. All three can show up on the same closing statement, and each one is calculated differently. Ask your attorney early which of these apply to your deal so nothing surprises you at the table.
If you are trying to get a real handle on what your own numbers would look like, ask me directly at /askmuds or check your home value at /my-home-value/.