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Brad, Retired IRS Agent
Category: Tax
Satisfied Customers: 177
Experience:  Retired; 32 years service and expertise in Individual, Partnership, Trust, Corporate Tax Law;Mensa
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I live in NY (Westchester County) and want to re-finance my ...

Customer Question

I live in NY (Westchester County) and want to re-finance my mortgage. However, this normally comes with a ridiculuous tax in NY State -- the Mortgage Transfer tax i think it is called. Is there a way around this unfair tax? Why must a home owner have the pay this on a ReFI?
Submitted: 9 years ago.
Category: Tax
Expert:  Brad replied 9 years ago.

Good Morning, Mr.Customer

I do hope that I am the bearer of good news, and this depends on whether you know about CEMA....the Consolidation Extension Mortgage Agreement. I have listed a very important website below where this CEMA is discussed. As you see from the example below, by working with your lender, you will only have to pay the tax on the increase in the new mortgage rather than on the whole mortgage.

Please visit and study every website that I've cited below as they will address your concerns about refinancing and go into detail on most of the things that New Yorkers should think about when dealing with a mortgage.


I. "The first place you should call when looking to refinance your mortgage is the lender who currently holds your mortgage. The reason is that your current lender may be able to waive a few fees here and there. In addition, if you live in a place like New York City where mortgage transfer tax is very expensive, your current lender will be able to refinance you and not have you pay the full amount of the transfer tax by utilizing a CEMA(Consolidation Extension Mortgage Agreement).."



CEMA Example (from above website!)

$100,000 currently owed on your mortgage.
Seeking a new mortgage of $125,000.
New York City Transfer Tax calculation = Loan Amount x 1.80% - $25.

Mortgage Tax with no CEMA
$125,000 x 1.80% = $2,250.00 - $25 = $2,225.00

Mortgage Tax with a CEMA
$125,000 - $100,000 = $25,000 x 1.80% = $450 - $25 = $425
CEMA Savings = $1,800.00

Keep in mind that it may be possible for you to obtain a CEMA by refinancing with another lender but the reality is that there is no guarantee that your current lender will transfer the tax to the new bank. If they do, the process may be quite lengthy.


II. Some more reading material on this issue. Please go to the website listed below.

New York State Mortgage Tax:

New York State Mortgage tax depends on factors such as type of property, taxable property value and rate. The tax becomes due at the time of recording a mortgage, be it for refinancing or debt consolidation, and varies from county to county.

If refinanced for a higher amount, then tax needs to be paid only for the additional amount and not for the entire mortgage. Real Property transfer gains tax, Real Estate transfer tax and mortgage recording tax are some of the types of New York state mortgage tax that have to be paid depending on the nature of the real estate transaction. The final amount will depend, however, on the type of property. Tax rates on properties vary depending on whether they are family homes, apartment buildings, or commercial, industrial and utility company properties.

"A part of the tax amount goes towards the town or city where the mortgage property is located while a quarter of the tax paid is due to the state of New York. Information on previous mortgage, value of the property for which tax has been paid, appreciation of real taxable property, rise in mortgage debt and current rate are required when refinancing or registering the mortgage. Submitting signed and notarized affidavit copies specifying the required deductions can help in claiming eligible exemptions"


III. A great article that you must read is available at the website listed below.

It starts out thus:

"Many homeowners want to know if it worth taking a New York mortgage refinance. How do you know if New York refinance makes sense in your case? Read on to understand when you should refinance and how to go about doing it."


IIII. Another enlightening article for you starts:

"Confused with the New York state mortgage tax jargon? Baffled by your mortgage recording tax amounts in New York? Read on for information to help you figure your best mortgage tax options in the Empire State."


I am very sure that my research has brought good news to you that should save you much on your transfer taxes by using CEMA, but I am very concerned that you be satisfied with my research. Please do send me feedback if you wanted me to dig deeper into this area of NY Mortgage transfer tax and I would be delighted to assist you.