March 28, 2015
Getting a Mortgage Tax Refund
With tax season upon us, we want to share an often-overlooked—but valuable—tax credit. (Who said that we only save you money on title insurance?) But you should act quickly—before you file your 2014 taxes—to get a refund of a portion of the mortgage recording taxes you’ve paid.
New York’s Special Additional Mortgage Recording Tax Credit is available if you or your business paid the special additional mortgage recording tax on commercial real estate in New York State on or after January 1, 2004. The tax credit applies to the full amount of special additional mortgage recording tax paid or 0.25% of the total new money loan amount on commercial property in New York State.
EXAMPLE: If you borrowed $1 million of new money on a commercial property in the State of New York and paid commercial mortgage taxes, you are entitled to a $2,500 credit.
Individuals, sole proprietors, partners in a partnership (including members of an LLC that is treated as a partnership for federal income tax purposes), estates and trusts and beneficiaries of estates and trusts may also qualify for this credit if the person or entity paid the tax on or after January 1, 2004.
Depending on who paid the special additional mortgage tax, either the lender or the borrower may claim this tax credit. If the amount of the tax credit exceeds your tax for the tax year, you can carry over the amount of credit exceeding your tax to the following year (or years). Or you may elect to the treat the unused amount of tax credit as an overpayment of tax to be credited or refunded. You apply for this refund on your personal tax return, which is generally due April 15, 2015. You may even be able to file amended returns for prior years to take advantage of the credit if you missed it previously.
To obtain the credit, the property must be in New York State. In 13 counties, the property must be commercial. This tax credit is inapplicable to residential mortgages recorded on or after January 1, 2004 if the property is located in Erie, New York, Bronx, Queens, Kings, Richmond, Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, or Westchester counties. The statute defines a “residential mortgage” for the purposes of the credit as a mortgage of real property principally improved by one or more structures containing a total of not more than six residential dwelling units, each with its own separate cooking facilities.
For more information and to take advantage of this special additional mortgage recording tax credit, please visit The New York State Department of Taxation and Finance via these links:
- New York State Department of Taxation and Finance instructions
- New York State Department of Taxation and Finance Form IT-256
This credit does not apply to shareholders of New York S corporations. However, a New York S corporation can continue to claim a credit for this tax directly on its New York State S corporation return using Form CT-43, Claim for Special Additional Mortgage Recording Tax Credit.
This email is informational-only and does not constitute tax or legal advice. If you paid the special additional mortgage recording tax on or after January 1, 2004 and you believe that you may qualify for this tax credit, we urge you to seek the advice of a qualified tax or legal professional who can help you determine if this credit applies to you and provide you with all of your available options for taking advantage of this tax credit.