Chapter 23: Real Property Transfer Tax

§ 23-01 General Powers of the Commissioner of Finance.

In addition to all other powers granted to the Commissioner of Finance and set forth in these regulations, he is also authorized and empowered:

   (a)   To make, adopt and amend rules and regulations appropriate to the carrying out of the Real Property Transfer Tax and the purposes thereof;

   (b)   To extend, for cause shown, the time for filing any return for a period not exceeding thirty days; and to compromise disputed claims in connection with the taxes thereby imposed;

   (c)   To request information from the Tax Commission of the State of New York or the Treasury Department of the United States relative to any person; and to afford information to such Tax Commission or Treasury Department relative to any person, any other provision of the law to the contrary notwithstanding;

   (d)   To delegate his functions under the law to a deputy commissioner or any employee or employees of the Department of Finance;

   (e)   To prescribe the methods for determining the consideration and net consideration attributable to that portion of real property located partly within and partly without the City of New York which is located within the City of New York or any interest therein;

   (f)   To require any grantor or grantee to keep such records, and for such length of time as may be required for the proper administration of the law;

   (g)   To assess, determine, revise and adjust the taxes imposed under the law.

§ 23-02 Definitions.

Affixed. "Affixed" includes attached or annexed by adhesion, stapling or otherwise, or a notation by stamp, imprint, or writing.

City. "City" means the City of New York.

Commissioner of Finance. "Commissioner of Finance" means the Commissioner of Finance of the City of New York.

Confirmation. "Confirmation" shall mean the document or electronic transmission that will be issued by the Commissioner of Finance on the date that the electronic format of the return is deemed received by the Department of Finance and indicates the date upon which the electronic return is so filed with the Department of Finance, and may be in the form of a number or other indication entered by the Department on a copy of the electronic return.

Consideration. 

   (1)   General. The price actually paid or required to be paid for real property or an economic interest therein, without deduction for mortgages, liens or encumbrances, whether or not expressed in the deed or instrument and whether paid or required to be paid by money, property, or any other thing of value. The term includes the cancellation or discharge of an indebtedness or obligation. It shall also include the amount of any mortgage, lien or other encumbrance, whether or not the underlying indebtedness is assumed. Where an option to purchase real property or an economic interest therein is exercised, consideration shall include the amount paid or required to be paid to the grantor or his designee for the option. To illustrate:

Illustration (i): A parcel of real estate is sold for $50,000 cash subject to an existing mortgage of $30,000 which remains on the property after delivery of the deed. The consideration for the transfer is $80,000 and the tax applies to the deed.

Illustration (ii): A parcel of real estate is sold for $30,000. The deed recites that the consideration is $10 and other good and valuable consideration. The consideration for the transfer is $30,000 and the tax applies to the deed.

Illustration (iii): Separate deeds by which each of the tenants-in-common of realty conveys his own interest in the property to a common grantee for a consideration of less than $25,000 for each deed are not subject to tax, even though in total the consideration paid by the grantee is more than $25,000.

Illustration (iv): A owns real property worth $50,000. B owns real property which is also worth $50,000. A and B exchange their real property. The tax applies to the transfer of A's realty and the transfer of B's realty. The consideration in each case is the fair market value of the property received in exchange for the realty conveyed.

Illustration (v): A owns real property having a fair market value of $50,000, subject to a $30,000 mortgage. B owns unencumbered realty having a fair market value of $20,000. A and B exchange realty. The consideration for the transfer of A's property is the fair market value of the property received ($20,000) plus the amount of the mortgage upon the realty conveyed ($30,000), or $50,000. The consideration for the transfer of B's property is $20,000. Although B receives consideration having a fair market value of $50,000, only $20,000 of this is in exchange for B's property. The balance ($30,000) is deemed to be in exchange for B's taking A's property subject to the $30,000 mortgage. Since the consideration for B's property is less than $25,000, there is no tax on the transfer of B's property.

   (2)   Where a grantee agrees to pay the City and State transfer taxes due on a conveyance, as part of the consideration for the conveyance, the obligations so assumed are included in computing the tax as follows:

      (i)   Calculate the "tentative" City and State transfer taxes based on the consideration exclusive of the transfer tax liabilities which the grantee is assuming.

      (ii)   Add the sum of the "tentative" taxes to the consideration and calculate the City transfer tax (and State transfer tax) to be Paid on the total.

To Illustrate: Assume real property is sold for $300,000 with the purchase price being paid in cash (or purchase money mortgage) of $220,000 and by taking subject to a continuing mortgage lien of $80,000, and the grantee agrees to pay the City and State transfer taxes due on the sale. The tax due is computed as follows:

Tentative City Tax:
Consideration	$300,000
Tax Rate	× 1%
Tentative Tax	$3,000
Tentative State Tax:
Consideration	$220,000
Tentative tax at $2 per $500	$880
City Transfer Tax Due:
Consideration	$300,000
Add: Tentative Taxes	$3,880
Taxable Consideration	$303,880
Tax Rate	× 1%
Tax Due	$3,038.80

 

   (3)   Consideration in the Case of Transfers of Controlling Economic Interests.

      (i)   In the case of the transfer of a controlling economic interest in real property, a proportionate share of the amount of any mortgage on the real property must be added to the amount paid for the stock in a corporation or the interest(s) in a trust, partnership, association, or other unincorporated entity.

To illustrate: X Corporation owns real property in New York City with a fair market value of $1,000,000 but encumbered by a $900,000 mortgage. X's stock is sold for $100,000 cash. The $900,000 mortgage is to be added to the $100,000 cash and the tax computation is based on $1,000,000 of consideration.

      (ii)   Where the entity whose stock or ownership interest is being transferred owns other assets in addition to real property, only the consideration attributable to the real property is subject to tax.

      (iii)   (A)   An apportionment of the consideration between the real property (or an interest therein) and the other assets, which in the opinion of the Commissioner of Finance represents an apportionment made in good faith, will be accepted by the Department.

         (B)   If no apportionment of the consideration for the real property (or interest therein) and the other assets has been made, or if, in the opinion of the Commissioner of Finance, the apportionment of the consideration does not represent an apportionment made in good faith, then the consideration for the real property (or interest therein) shall be calculated by multiplying total consideration by the following ratio: Fair market value of the real property (or interest therein) owned by the entity being transferred. Fair market value of all assets owned by the entity, including the real property (or interest therein) To illustrate:

Illustration a: X Corporation owns real property in New York City with a fair market value of $500,000 and other assets valued at $1,000,000. All of X's stock is sold for $1,500,000 cash. The consideration subject to tax is $500,000.

Illustration b: X Corporation owns real property in New York City with a fair market value of $500,000, but encumbered with a $300,000 mortgage, and other assets valued at $1,000,000. All of X's stock is sold for $1,200,000 cash. The consideration subject to tax is $500,000 calculated as follows:

Value of real property	$500,000
Less amount of mortgage	$300,000
Reduced value of real property		$200,000
Value of other assets		$1,000,000
Total reduced value of assets		$1,200,000
Cash paid	$1,200,000
Cash paid attributable to real property
200,000 × $1,200,000 = 1,200,000	$200,000
Add amount of mortgage	$300,000
Total consideration attributable to real property	$500,000

 

Illustration c: X Corporation owns real property in New York City with a fair market value of $500,000. Y Corporation owns 100% of the stock of Z Corporation. Z owns real property in New York City with a fair market value of $600,000 and personal property valued at $400,000. X deeds its realty to Y in exchange for 50% of the stock of Z. Two transfer taxes are due. First, the conveyance of X's real property by deed to Y is taxable. The consideration for this conveyance is the Z stock received by X which has a value of $500,000. The total consideration of $500,000 is subject to tax. Second, the transfer of 50% of Z's stock to X is a transfer of a controlling economic interest in real property and, thus, is subject to tax. The consideration for this transfer is the real property valued at $500,000 received by Y. This consideration, however, must be apportioned between Z's real property and its other assets. Accordingly, since the real property represents 60% of Z's total assets, 60% of the consideration, or $300,000, is subject to tax.

      (iv)   If the aggregation of related transfers results in the transfer of a controlling economic interest in an entity which owns real property (or an economic interest therein), the tax on such transfer shall be measured only by that part of the consideration for the controlling interest which is apportioned to such real property (or such economic interest therein) which was owned by the entity throughout the period during which the transfers were made.

To illustrate: X Corporation owns two parcels of realty in New York City, Parcel 1 and Parcel 2. Parcel 1 has a fair market value of $1 million and Parcel 2 has a fair market value of $500,000. X also owns other assets valued at $500,000. A owns all of X's outstanding stock. In year 1, A sells 40% of X to B for $800,000. In year 2, X sells Parcel 2 for $500,000. In year 3, A sells 10% of X to C for $200,000. If A's transfers are related, then a controlling economic interest in Parcel 1 has been conveyed. The consideration apportioned to Parcel 1 is calculated by multiplying the consideration for each separate transfer by the ratio of the fair market value of Parcel 1 to the fair market value of X's total Assets. Thus, in year 1 the consideration apportioned to Parcel 1 is calculated as follows:

$1,000,000 × $800,000 = $400,000
$2,000,000

In year 3, the consideration is apportioned to Parcel 1 as follows:

$1,000,000 × $200,000 = $100,000
$2,000,000

Therefore, the total consideration subject to tax is $500,000. (Note: X's transfer of Parcel 2 is also subject to tax.)

   (4)   Cross reference. For rules relating to the determination of consideration in the case of transfers of cooperative units, see 19 RCNY § 23-03(h).

Controlling interest. "Controlling interest" shall mean:

   (1)   General. In the case of a corporation, 50% or more of the total combined voting power of all classes of stock of such corporation, or 50% or more of the total fair market value of all classes of stock of such corporation; and in the case of a partnership, association, trust or other entity, 50% or more of the capital, profits or beneficial interest in such partnership, association, trust or other entity.

   (2)   Aggregation. A transfer of a controlling economic interest made by one or several persons, or in one or several related transfers, is subject to the transfer tax. Related transfers are aggregated in determining whether a controlling economic interest has been transferred. Related transfers include transfers made pursuant to a plan to either transfer or acquire a controlling economic interest in real property. Transfers made within a three year period are presumed to be related and are aggregated, unless the grantor(s) or grantee(s) can rebut this presumption by proving that the transfers are unrelated. (However, see paragraph (3) of this definition for aggregation of transfers made on recognized exchanges or over-the-counter markets subject to Securities and Exchange Commission regulation.) Transfers aggregated with respect to whether a controlling economic interest has been transferred will also be aggregated with respect to the $25,000 threshold for imposition of the tax and the applicable rate of tax. Transfers made prior to July 13, 1986, are not aggregated. To illustrate:

Illustration (i): X Corporation owns real property in New York City. A, B and C each own 1/3 of X's outstanding stock. A and B, acting in concert, each sell their entire interest in X Corporation to D. B's sale occurs four years after A's sale. The transfers made by A and B are related and, therefore, subject to the transfer tax, even though made more than three years apart.

Illustration (ii): X Corporation owns real property in New York City. A, B and C each own 1/3 of X's outstanding stock. A sells his entire 1/3 interest in X to D for $20,000. Within three years of A's sale, B sells his entire 1/3 interest in X to D for $20,000. The transfers made by A and B are presumed to be related because they were made within a three year period. Since the total consideration exceeds $25,000, the transfers are presumed to be related and the transfer tax will apply to the sales of stock by A and B.

Illustration (iii): X Corporation owns real property in New York City. A owns 100%- of the stock of X. On January 1, 1988, A sells 20% of X to B. On December 31, 1990, A sells 30% of X to C. Since A has transferred a controlling economic interest in real property within a three year period, the transfer tax will apply to both sales made by A.

Illustration (iv): X Corporation owns real property in New York City. A owns 100% of the stock of X. In year 1, A transfers 20% of X to B. In year 3, A transfers 30% of X to C. In year 5, A transfers 25% of X to D. In year 9, A transfers his remaining 25% interest in X to E.

   (A)   Since A's transfers to B and C (constituting 50% of the stock of X) have occurred within a three year period, they are presumed to be related. Therefore, these transfers are subject to the transfer tax.

   (B)   Since A's transfers to C and D (constituting 55% of the stock of X) have occurred within a three year period, they are also presumed to be related. Therefore, the transfer to D is also subject to the transfer tax. No additional tax is due on the transfer to C above what was already due on the transfer to C in year 3.

   (C)   The transfer to E has not occurred within three years of any other transfer of X stock. Accordingly, unless the transfer to E was part of a plan under which 50% or more of X was to be transferred or acquired, the transfer to E is not subject to the transfer tax.

Illustration (v): X Corporation owns real property in New York City. A owns 100% of the stock in X. In year 1, A transfers 20% of X to B. In year 3, A transfers 10% of X to C. In year 5, A transfers 20% of X to D. No transfer of a controlling economic interest in X has occurred within three years. Therefore, if A's transfers to B, C and D were each independent and not made pursuant to a plan, the transfers are not aggregated. No transfer tax will be due on A's transfers to B, C and D.

Illustration (vi): X Corporation owns real property in New York City. A owns 100% of X's stock. On January 1, 1986, A sells 20% of X to B. On April 1, 1986, A sells 25% of X to C. On September 1, 1986, A sells 25% of X to D. Since A has only transferred 25% of X on or after July 13, 1986, no taxable transfer of a controlling economic interest in real property has occurred and no transfer tax is due on A's transfers to B, C and D.

Illustration (vii): X Corporation owns real property in New York City. A owns 100% of the outstanding stock of X. A embarks on a five year plan to sell 75% of X. These sales are made to unrelated parties, none of whom will acquire 50% or more of X. All of A's transfers are related and, therefore, are aggregated. Once a 50% interest in X, in the aggregate, has been transferred, a transfer tax will be due and transfer tax returns will be required to be filed for every transfer which has been made pursuant to the plan. In addition, each subsequent transfer by A made after the 50% interest has been transferred will require the filing of a return and the payment of tax.

Illustration (viii): X Corporation owns real property in New York City. A owns 4% of the outstanding stock of X. B, C, D, E, F, G, H, and I each own 12% of the outstanding stock of X. J enters into agreements with A, B, C, D, and E to purchase their interests in X over a five year period. All of the transfers to J are related and, therefore, will be aggregated. A transfer tax will be due and transfer tax returns will be required to be filed for each transfer once a 50% interest in X, in the aggregate, has been transferred.

Illustration (ix): X Corporation owns realty in New York City. A has owned 40% of the outstanding stock of X for five years. B sells 20% of the outstanding stock of X to A. B's sale is not subject to the transfer tax because a controlling economic interest in real property has not been transferred.

Illustration (x): X Corporation owns real property in New York City. A and B each own 50% of X. On January 1, 1987, A sells 20% of X to C. On December 31, 1989, B sells 30% of X to C. Since these transfers occur within a three year period, they are presumed to be related and, thus, subject to the transfer tax.

Illustration (xi): X Corporation owns real property in New York City worth $3,000,000. A, B and C each own 1/3 of X and are unrelated. In 1987, A loses a lawsuit related to her business and transfers her 1/3 interest in X in satisfaction of a $1,000,000 judgment. In 1989, pursuant to a separation agreement, B transfers his 1/3 interest in X to his spouse. The transfers by A and B will not be aggregated because the transfers are not related. Thus, no tax is due.

Illustration (xii): A owns 100% of the stock of X Corporation. X owns real property in New York City. A sells 30% of X to B. One year after this sale, B sells this 30% interest in X to C. Resales of the same interests are not aggregated. Thus, no tax is due.

Illustration (xiii): X Corporation owns real property in New York City. A owns 30% of X. In year 1, A sells 20% of X to B. In year 2, A buys 30% of X from C. A's 20% sale is not aggregated with A's 30% purchase. Therefore, no tax is due.

Illustration (xiv): Y Partnership owns real property in New York City. Pursuant to a syndication, partnership interests are transferred. Such syndication is subject to aggregation, and thus taxable, if 50% or more of the capital, profits or beneficial interest in the partnership is transferred pursuant to the syndication.

Illustration (xv): X Corporation owns real property in New York City. A, pursuant to a tender offer plan, seeks to acquire a controlling economic interest in X. If 50% or more of the total combined voting power of all classes of stock or 50% or more of the total fair market value of all classes of stock are transferred to A, then all such transfers are subject to tax as soon as 50% of such stock is conveyed.

   (3)   In the case of transfers made on recognized exchanges or on over-the-counter markets subject to regulation by the Securities and Exchange Commission, the following rules will govern:

      (i)   All transfers made pursuant to a plan are aggregated without regard to amount sold or when sold.

      (ii)   All other sales made within a three year period are presumed to be related, and thus aggregated, except for sales or purchases of less than 5% of a corporation's outstanding stock.

   (4)   In the case of a transfer of an ownership interest in an entity which owns an economic interest in real property, where such ownership interest is itself considered an economic interest in real property in accordance with 19 RCNY § 23-02 "Economic interest in real property", the percentage of both interests must be considered to determine whether a controlling economic interest in real property has been transferred. To illustrate:

Illustration (i): A transfers 80% of the stock of X Corporation to B. X owns 70% of the stock of Y Corporation, which owns real property. Assume that A's interest in X is an economic interest in the real property. A has transferred a controlling economic interest in real property to B.

Illustration (ii): Assume the same facts as in illustration (i), except that X Corporation owns only 60% of the stock of Y Corporation. A has not transferred a controlling economic interest in real property to B.

(For rules on consideration in the cases of transfers of controlling economic interests, see 19 RCNY § 23-02 "Consideration" (3). For rules relating to the impact of the exemption for transactions constituting a mere change of identity or form of organization or ownership on transfers of controlling economic interests, see 19 RCNY § 23-05(b)(8).)

Deed. "Deed" shall mean any document or writing (other than a will), regardless of where made, executed or delivered, whereby any real property or interest therein is created, vested, granted, bargained, sold, transferred, assigned or otherwise conveyed, including, on and after February 1, 1982, any such document, instrument or writing whereby any leasehold interest in real property is granted, assigned or surrendered. To illustrate:

Illustration 1: The devise of an interest in real property under a will is not subject to tax.

Illustration 2: A deed given by an executor in accordance with the terms of a will is not subject to tax; however, if by reason of a consideration passing between devisees, one of them takes a greater share in the realty than that to which he is entitled under the will, the deed given by the executor to convey such greater share is subject to tax computed upon the amount of such consideration.

Illustration 3: A deed given by an executor in connection with the sale of an interest in real property is subject to tax.

Illustration 4: A collateral assignment of rents due under the terms of a leasehold, given as security for an indebtedness, is not a leasehold interest in real property and is not subject to tax.

Economic interest in real property. "Economic interest in real property" shall mean:

   (1)   The ownership of shares of stock in a corporation which owns real property; the ownership of an interest or interests in a partnership, association or other unincorporated entity which owns real property; and the ownership of a beneficial interest or interests in a trust which owns real property.

   (2)   For transfers occurring prior to April 24, 1995, the ownership of shares of stock in a corporation that owns an economic interest in real property, the ownership of an interest or interests in a partnership, association, or other unincorporated entity which owns an economic interest in real property, and the ownership of a beneficial interest or interests in a trust which owns an economic interest in real property, may also constitute an economic interest in real property. The factors to be weighed in determining whether such ownership constitutes an economic interest in real property include the nature of the activities, assets, and purposes of the above-described entities. To illustrate:

Illustration (i): X Corporation is a holding company whose sole asset is 100% of the stock of Y Corporation. Y owns real property located in New York City. Since X exists principally for the purpose of holding stock in a subsidiary which owns real property, the ownership of X stock constitutes an economic interest in real property and the sale prior to April 24, 1995, of all the stock of X Corporation is a transfer of a controlling economic interest in real property.

Illustration (ii): X Corporation is primarily engaged in manufacturing outside of New York City. X does not own real property in the City, but does own 100% of the stock of Y Corporation, which owns real property in the City. Since X does not exist principally for the purpose of holding stock in a subsidiary which owns real property, but rather is substantially engaged in other bona fide activities, the ownership of X stock does not constitute an economic interest in real property and the sale prior to April 24, 1995, of all the stock of X Corporation will not constitute a transfer of a controlling economic interest in real property.

   (3)   For transfers occurring on or after April 24, 1995, the ownership of shares of stock in a corporation that owns an economic interest in real property, the ownership of an interest or interests in a partnership, association, or other unincorporated entity which owns an economic interest in real property, and the ownership of a beneficial interest or interests in a trust which owns an economic interest in real property, also constitutes an economic interest in real property. To illustrate:

Illustration (iii): X Corporation is engaged in manufacturing outside New York City. X Corporation does not own real property in the City but owns 100% of the stock of Y Corporation, which owns real property located in New York City. The ownership of X Corporation stock constitutes an economic interest in real property and the sale on or after April 24, 1995, of all the stock of X Corporation is a transfer of a controlling economic interest in real property. The result would be the same if, instead of owning the property directly, Y Corporation owns 100% of the stock of Z Corporation, which owns the property.

Illustration (iv): X Corporation is engaged in manufacturing outside New York City. X Corporation does not own real property in the City but owns 49% of the stock of Y Corporation, which owns real property in the City. The ownership of X stock constitutes an economic interest in real property. However, a sale on or after April 24, 1995, of all the stock of X Corporation is not subject to tax as a transfer of a controlling economic interest in real property because there has been no transfer of a controlling interest in Y Corporation.

   (4)   For transfers occurring on or after April 24, 1995, of stock in a corporation that owns an economic interest in real property, an interest in a partnership, association, or other unincorporated entity that owns an economic interest in real property, or a beneficial interest in a trust that owns an economic interest in real property, if the transfer would not have constituted a transfer of an economic interest in real property had such transfer occurred prior to April 24, 1995, such transfer will not constitute a transfer of an economic interest in real property if the transfer is made pursuant to a binding written contract entered into prior to April 24, 1995, provided the date of execution of the contract is confirmed by independent evidence, such as the recording of the contract, payment of a deposit or other facts and circumstances determined to be applicable by the commissioner of finance. In addition, transfers occurring prior to April 24, 1995, or on or after April 24, 1995, pursuant to a binding written contract entered into prior to that date, as determined above, of stock in a corporation that owns an economic interest in real property, an interest in a partnership, association, or other unincorporated entity that owns an economic interest in real property, or a beneficial interest in a trust that owns an economic interest in real property that do not or would not constitute transfers of an economic interest in real property will not be aggregated with any other transfer occurring on or after April 24, 1995, in determining whether there has been a transfer of a controlling economic interest in real property. To illustrate:

Illustration (v): X Corporation is engaged in manufacturing outside New York City. X Corporation does not own real property in the City but does own 75% of the stock of Y Corporation, which owns real property in the City. In December, 1994, the sole shareholder of X Corporation entered into a binding written agreement to sell all her shares of X Corporation stock. At that time, the purchaser made the required down payment, which the shareholder deposited in her bank account. The closing took place on May 1, 1995 at which time the shares of X Corporation stock were delivered to the purchaser in exchange for the balance of the purchase price. The transfer of the X shares on May 1, 1995 is not subject to tax as a transfer of a controlling economic interest in real property because it took place pursuant to a binding written contract entered into prior to April 24, 1995.

Illustration (vi): X Corporation is engaged in manufacturing outside New York City. X Corporation does not own real property in the City but does own 75% of the stock of Y Corporation, which owns real property in the City. A, B and C each own 20% of X Corporation and D owns the remaining 40% of the stock. On March 30, 1995, A sold his 20% of the X Corporation stock to E, an unrelated party. On May 1, 1995, B and C transfer their X Corporation stock to E. Because A's transfer occurred prior to April 24, 1995, his transfer is not aggregated with the transfers by B and C. Therefore, because B's and C's transfers represent only 40% of the X Corporation stock, there has been no transfer of a controlling economic interest in Y Corporation.

Illustration (vii): X Corporation is engaged in manufacturing outside New York City. X Corporation does not own real property in the City but does own 100% of the stock of Y Corporation, which owns real property in the City. A, B and C each own 20% of X Corporation and D owns the remaining 40% of the stock. On March 30, 1995, A sold his 20% of the X Corporation stock to E, an unrelated party. On May 1, 1995, B and D transfer their X Corporation stock to E. Because B's and D's transfers represent 60% of the X Corporation stock, those transfers are subject to the tax as a transfer of a controlling economic interest in Y Corporation. However, because A's transfer occurred prior to April 24, 1995, his transfer is not aggregated with the transfers by B and D and is not subject to the tax.

   (5)   In the case of a transfer of an ownership interest in an entity owning an economic interest in real property, where such ownership interest, itself, constitutes an economic interest in real property under these rules, the percentage of both interests must be considered to determine whether a controlling economic interest in real property has been transferred. (See 19 RCNY § 23-02 "Controlling interest" (3))

Electronic return."Electronic return" shall mean the completed real property transfer tax return in the electronic format prescribed by and formatted by the Department of Finance and available through the internet website of the Department of Finance, and filed electronically through the Department of Finance website.

Filed electronically. "Filed electronically" shall mean submitted to the Department of Finance through, and in accordance with the instructions found on, the internet website of the Department of Finance.

Grantee. "Grantee" shall mean the person or persons accepting the deed or who obtain any of the real property which is the subject of the deed or any interest therein. The term "grantee" also includes the person or persons to whom an economic interest in real property is transferred.

Grantor. "Grantor" shall mean the person or persons making, executing or delivering a deed. The term "grantor" also includes the person or persons who transfer an economic interest in real property.

Instrument. "Instrument" shall mean any document or writing (other than a deed or a will), regardless of where made, executed or delivered, whereby any economic interest in real property is transferred.

Net Consideration. "Net Consideration" shall mean any consideration, exclusive of any mortgage or other lien or encumbrance on the real property or interest therein which existed before the delivery of the deed and remains thereon after the delivery of the deed. The term "net consideration", as a basis for computing the real property transfer tax, applies to conveyances made prior to February 1, 1982, or conveyances made after that date if made in performance of a contract executed prior thereto. It also applies to conveyances made on or after February 1, 1982 and before July 1, 1982 where the conveyance involves a 1, 2 or 3 family house or individual residential condominium unit or where the consideration for the conveyance is less than $500,000. (See 19 RCNY § 23-03.) In determining the amount of net consideration, only the amounts of liens and encumbrances on the property existing before the sale and not removed thereby may be deducted. Thus, for example, taxes or assessments which are liens on the property before the sale and are not paid at the time of sale are deductible. No deduction shall be made on account of any lien or encumbrance placed on the property in connection with the sale, or by reason of deferred payments of the purchase price whether represented by notes or otherwise. As used herein, the term "sale" refers to the delivery of the deed. To illustrate:

Illustration 1: A parcel of real property is sold for $50,000 subject to an existing mortgage of $35,000 which remains thereon after delivery of the deed. The mortgage is not treated as part of the net consideration for the conveyance. Consequently, the tax is to be computed upon the net consideration, viz: $15,000 ($50,000 – $35,000).

Illustration 2: A parcel of real estate is sold for $50,000, free and clear of mortgages, liens and encumbrances. The purchaser gives a purchase money mortgage to the seller or a third party in the amount of $35,000 to secure the payment of a portion of the purchase price. The mortgage was placed on the property as the result of the sale and cannot be deducted in determining the net consideration. Consequently, the tax is to be computed on the consideration of $50,000.

Illustration 3: A parcel of real property was sold on January 10, 1950, for $60,000 subject to a first mortgage of $30,000. On July 10, 1959 the property is sold for $80,000 subject to the balance of the mortgage remaining unpaid, viz: $10,000. The balance of the purchase price, viz: $70,000 is paid in cash. The tax is to be computed on the net consideration of $70, 000. Illustration 4: A parcel of real property is sold on July 15, 1959 for $75,000. Under the terms of the contract of sale, the grantor agrees to, and does, pay off an existing mortgage of $20,000, and agrees to take $45,000 in cash and a purchase money mortgage for $30,000. The tax is to be computed on the consideration of $75,000.

Paper return. "Paper return" shall mean the paper copy of the completed real property transfer tax return as it is printed after completion in electronic format or by other means as designated by the Commissioner of Finance, bearing the original signatures of the grantor or the grantor's agent and the grantee or the grantee's agent.

Person. "Person" shall mean an individual, partnership, society, association, joint stock company, corporation, estate, receiver, trustee, assignee, referee or any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise, any combination of individuals, and any other form of unincorporated enterprise owned or conducted by two or more persons.

Real Property. "Real Property" shall mean every estate or right, legal or equitable, present or future, vested or contingent, in lands, tenements or hereditaments, which are located in whole or in part within the City of New York, including, on and after February 1, 1982, a leasehold interest in real property. To illustrate:

Illustration 1: The term includes an easement (including a negative easement) in real property, but not a license to use real estate in which a person confers upon another only a personal, revocable and unassignable privilege to make use of the property but grant no interest or estate therein.

Illustration 2: The term includes excess zoning rights in connection with zoning lot mergers and development rights relating to landmark-designated parcels.

Illustration 3: The term includes not only an estate in fee simple but also a life estate. The estate granted need not take effect immediately upon conveyance but may be postponed to a future time, as where a grantor grants a remainder to another to take effect upon the termination of a precedent life estate conveyed at the same time.

Illustration 4: The term includes an ownership interest in a condominium unit.

Illustration 5: The term does not include a mortgage, or a release of,mortgage.

Illustration 6: The term does not include rights to sepulture.

Register. "Register" includes the City Register and the County Clerk of the County of Richmond.

Return. "Return" shall mean the electronic return together with the paper return as they are defined in this section, and together with any other documents required by these rules to be attached to the paper return.

Transaction. "Transaction" shall mean any act or acts, regardless of where performed, and whether or not reduced to writing, unless evidenced by a deed or instrument, whereby any economic interest in real property is transferred (other than a transfer pursuant to a will or the laws of the intestate succession).

Transfer or transferred. When used in relation to an economic interest in real property, the terms "transfer" or "transferred" shall include the transfer or transfers or issuance of shares of stock in a corporation, interest or interests in a partnership, association or other unincorporated entity, or beneficial interests in a trust, whether made by one or several persons, or in one or several related transactions, which shares of stock or interest or interests constitute a controlling interest in such corporation, partnership, association, trust or other entity.