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The Mortgage Recording Tax (MRT) is a state and local tax imposed when a mortgage is recorded against real property in New York. This tax applies to various types of loans secured by real estate, including home equity loans and home equity lines of credit (HELOCs). Understanding how MRT applies to these financial products can help homeowners better anticipate costs when leveraging the equity in their property.
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Section 01
Yes, MRT applies to home equity loans because they involve a recorded mortgage securing the loan against real property. A home equity loan is a lump-sum loan that allows homeowners to borrow against the equity in their home. Since the mortgage securing the loan must be recorded with the county clerk, the transaction is subject to MRT.
Section 02
Similarly, a home equity line of credit (HELOC) is also subject to MRT if it is secured by real property. A HELOC functions as a revolving line of credit that homeowners can draw from as needed. Even though funds are accessed over time rather than as a lump sum, the fact that a mortgage is recorded means MRT applies.
Section 03
MRT is typically calculated as a percentage of the loan amount. The rates vary based on loan size and property type:
Borrowers usually pay MRT at closing, and in many cases, lenders may roll this cost into the loan amount.
Section 04
While MRT is generally applicable, there are potential ways to reduce or avoid it:
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