The New York State Department of Taxation and Finance announced it is now collecting sales tax on "the sale of an abstract of title to real property" and on similar information collection services. This went into effect September 1, 2010. Madison is not permitted to waive or absorb the sales tax when it is owed. On ordinary real estate transactions, we will collect the sales tax at closing, and the tax will be noted on the closing statement.
Whom does the new New York sales tax on Abstracts of Title affect?
This sales tax applies to all search and abstract services performed in most New York counties. However, it does not apply to many search and abstract services in "Downstate" New York counties (i.e., Albany, Bronx, Columbia, Dutchess, Greene, Kings, Nassau, New York, Orange, Putnam, Queens, Rensselaer, Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester, NYC, and Long Island). The sales tax does not apply Downstate when the search or abstract service was necessary in order to issue a title policy because the charge for that search is built into the title insurance premium. The sales tax does apply to other types of searches and abstracts including most municipal and departmental searches (other than municipal tax searches), patriot searches, state UCC searches (but not county UCC searches), judgment searches of parties who are not in the chain of title (such as members of an LLC), and any search that is not ordered in connection with a title policy.
The difference between Upstate and Downstate sales tax is based on the location of the property that is being insured. However, the sales tax rate applicable to a particular service and whether sales tax is to be collected at all depends on where the search or abstract is delivered.
How is the New York sales tax on Abstracts of Title calculated?
Various factors makes the sales tax rules somewhat complicated to apply. Click here to view the tax rate chart putout by the New York Department of Taxation and Finance. If you have a question, contact us at 732.333.2313.You can also visit www.tax.state.ny.us for more information.