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NY State Legislature Considers Extending Mortgage Recording Tax to Mezzanine Debt

The New York State legislature is considering extending the application of the mortgage recording tax to mezzanine debt financings. The proposed bill would amend the existing mortgage recording tax provisions to (i) require that any mezzanine debt (debt secured by the equity interests in an entity that owns real property) be recorded concurrently with the related mortgage instrument and (ii) establish that the sum of the mortgage debt and any mezzanine debt be taxable at the applicable New York State mortgage recording tax rate (for commercial mortgages over $500k, the current rate for properties within NYC is 2.80%; for most counties outside of NYC, the rate is about 1%). All tax revenue generated from mortgages with related mezzanine debt would directly fund the development, maintenance or management of public housing and/or affordable housing.

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Practices: Real Estate Investments & Transactions, Business Restructuring

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