NYC Affordability

New York charges mortgage recording tax (MRT) every time a mortgage is recorded on real property in the five boroughs. Refinance the ordinary way, by paying off the old loan and recording a new one, and you pay the tax again on the whole balance, even though you already paid it once when you bought. A CEMA avoids that. The existing mortgage is assigned to the new lender (or kept by the same one) instead of being paid off, and it’s consolidated with any new borrowing into one loan with the new terms. Tax is then owed only on the gap between the old balance and the new loan.

The legal hook is Section 255 of the NYS Tax Law: a supplemental mortgage generally isn’t taxed again unless it secures new or further debt. The order of operations matters. The state tax department has ruled that once the old mortgage is discharged, it can no longer serve as the base for a tax-free supplemental mortgage, so a payoff that happens first, even by mistake, generally means paying the full tax.

CEMAs are most common on refinances. Purchase CEMAs, where a buyer takes over the seller’s existing mortgage, exist but are rare. Co-ops are out entirely: co-op shares are personal property, so co-op loans don’t pay MRT and there’s nothing for a CEMA to save. The lender charges for its trouble, commonly a flat fee or a percentage of the loan, and some lenders won’t assign their loans to another bank at all, so a CEMA makes sense only when those costs come in well under the tax.

Worked example

A condo owner owes $520,000 and refinances into a $600,000 loan. Without a CEMA, MRT is charged on the full new loan: $600,000 × 1.925% = $11,550. With a CEMA, only the $80,000 of new money is taxed; applying this site’s rate schedule (1.80% under $500,000), that’s $80,000 × 1.80% = $1,440, a saving of about $10,110 before the lender’s CEMA fees. The exact tax is computed through ACRIS at recording, so confirm the figure with your closing attorney.

The CEMA guide walks through costs and timing, and the Condo Calculator shows how much MRT sits in your cash-to-close to begin with.