New York Private Lender/Investor Alert: Senate Bill 5376

March 4, 2021 | Legislation

Analysis provided by the NPLA’s General Counsel, Jon Hornik

Attention NY Private Lenders and Investors, Bill #S5376 has been introduced to the NY Senate. If passed, the bill will adversely impact fix-n-flip transactions in New York City.

New York Senate Bill S5376

The new bill, called the “Covid-19 Community Protection Act of 2021,” substantially increases taxes on fix-n-flip transactions that are bought and sold in a two (2) year period as follows.

In regard to residential property of one to three units sold:

  • Within two years of purchase, an additional tax of sixty-five percent of the difference between the current sale price and the sale price of the prior conveyance if sold within one (1) year
  • If sold in a year or more, an additional tax of fifty percent of the difference
  • No additional tax is imposed if the time since the prior conveyance is two (2) years or more.

The bill exempts the following from the additional tax:

(i) property owners conveying property to a family member
(ii) property owners who can demonstrate a financial hardship that justifies a conveyance of property in less than or equal to two (2) years
(iii) property conveyed following the death of the property owner
(iv) property being sold as new housing
(v) property for which the consideration or value conveyed is less than or equal to ten percent more than the value of the property conveyed at the time of the prior conveyance
(vi) property conveyed to a mortgagee pursuant to a foreclosure sale
(vii) property otherwise exempt from payment of real property tax

The bill provides that property acquisitions in the amount of $750,000.00 or less for one to three residential units located in the city of NY shall be exempt from any tax or fee imposed by this article, except that this exemption shall not apply to legal entities, as defined in the statute.

Lastly, the bill also provides that an additional imposed tax of one percent of the purchase price to be paid by the grantee on any deed, instrument, or transaction of residential properties of one to three units with a sales price of one million dollars or more.

Private Lender Law and the NPLA are engaged in defeating this bill. For more information, please contact Jonathan Hornik of Private Lender Law at [email protected].

Author Bio: Jon Hornik, Esq. of Private Lender Law, serves as the General Counsel to the NPLA