N.Y. Comp. Codes R. & Regs. tit. 20 § 649.1

Current through Register Vol. 46, No. 25, June 18, 2024

Section 649.1 - Apportionment of principal debt or obligation

Tax Law, § 260

(a) Where a mortgage covers real property located partly within and partly without the State, the taxes described in Part 642 of this Title are determined based on an apportionment of the principal debt or obligation which is,or under any contingency may be secured at the date of the execution of the mortgage or at any time thereafter. The apportionment is made by multiplying such principal debt obligation by a fraction, the numerator of which is the net value of the mortgaged property located within this State, and the denominator of which is the net value of the mortgaged property located within and without the State. For the purpose of this subdivision, net value of the mortgaged property shall mean such property's fair market value less the unpaid amount of any prior existing mortgage liens that remain on the property subsequent to the execution of such mortgage.

Example:

Mr. Smith borrows $100,000 from Bank X, and gives the bank a mortgage on two commercially improved parcels. One of the parcels is located in Albany, New York and the other is located in Paterson New Jersey. The parcel located in Albany has a fair market value of $400,000, and has a prior existing mortgage lien totaling $33,000, which remains on the parcel after execution of the mortgage and which represents an amount owed to Bank Z. The parcel located in Paterson has a fair market value of $200,000, and has no prior existing mortgage liens. Therefore, the net value of the Albany parcel is $367,000 ($400,000 - $33,000) and the net value of both parcels is $567,000 ($367,000 + $200,000). The portion of the $100,000 debt secured by the mortgage subject to the taxes described in Part 642 of these regulations is computed as follows:

Net value of Albany parcel $367,000 × $100,000 = $64,727

Net value of both parcels 567,000

Accordingly, $64,700 ($64,727 rounded to the nearest $100) would be the amount used to compute the mortgage recording taxes.

(b) In determining the separate net values of the mortgaged property located within and without this State, the commissioner shall consider only tangible property, both real property and personal property, except that leases of real property shall be deemed to be tangible property.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 649.1