My organization is a municipal urban renewal agency. If we make and record a purchase money mortgage to help finance a low-income housing buyer's purchase of our land, do we owe mortgage recording tax on that mortgage?

Plain-English summary

A municipal urban renewal agency, created under General Municipal Law Articles 15, 15-A, and 15-B and structured as a public benefit corporation, owned a parcel it contracted to sell to a not-for-profit buyer that would build low-income housing on the site. To help the buyer close, the agency planned to make a purchase money loan to the buyer, record its own purchase money mortgage on the property, and expected to be paid off (via the buyer's permanent financing) shortly after. The agency asked whether it must pay mortgage recording tax when it records that mortgage.

New York's MRT statute (Tax Law § 252) generally says no mortgage or mortgage-holder is exempt from the tax "by reason of anything contained in any other statute" — a blanket anti-exemption rule. But courts have long recognized an exception rooted in constitutional tax immunity: a state agency, instrumentality, or political subdivision is immune from MRT on property used in the public interest, because taxing its mortgage is effectively taxing the entity itself (codified in 20 NYCRR § 644.1(a)). Separately, when a later, more specific statute conflicts with an earlier general one on the same subject, the later specific statute controls (a rule the Department has applied in several MRT opinions).

Here, the agency's enabling statute (General Municipal Law) declares it a governmental agency and instrumentality serving a public purpose (financing low-income housing), and GML § 560 — enacted well after the MRT statute — separately exempts the agency's property, income, and operations from taxation altogether. Because that GML exemption is both later-enacted and more specific to this type of entity, it takes precedence over the general MRT statute. The agency's purchase money mortgage is exempt from mortgage recording tax.

What this means for you

Urban renewal agencies and similar public benefit corporations

Recording your own purchase money mortgages to facilitate sales of agency-owned property (including for third-party low-income housing development) doesn't trigger mortgage recording tax, so long as your enabling statute independently declares your property, income, and operations tax-exempt and post-dates the general MRT statute.

Not-for-profit and affordable housing developers working with public agencies

If your financing structure involves the selling agency itself holding a purchase money mortgage (rather than a private lender), that mortgage may be exempt from MRT even though your own eventual permanent financing from a private lender would not be — plan closing costs accordingly.

Common questions

Q: Does the general MRT statute's anti-exemption language (Tax Law § 252) override this?
A: No — the Department applied the well-established principle that a later, more specific statute (here, the GML exemption for urban renewal agencies) takes precedence over an earlier general one (Tax Law § 252) on the same subject matter.

Q: Is this exemption automatic for any government-adjacent entity?
A: No. It depends on the entity's specific enabling statute declaring it a governmental instrumentality with a tax exemption for its property, income, and operations — not every quasi-governmental entity qualifies.

Q: Does the exemption extend to the eventual private lender who refinances the buyer?
A: Not addressed by this ruling — it covers only the agency's own purchase money mortgage. A private lender's mortgage would generally be subject to MRT in the ordinary course.

Q: Can I rely on this ruling for my own agency or transaction?
A: No. This advisory opinion binds the Department only as to the petitioner and the specific facts described.

Citations and references

Statutes and regulations:

• Tax Law § 252 (no MRT exemption from other statutes generally, subject to the later-specific-enactment exception)
• Tax Law § 253 (MRT imposition)
• General Municipal Law § 551 (urban renewal agency public purpose)
• General Municipal Law § 553.2 (urban renewal agency declared a governmental agency and instrumentality)
• General Municipal Law § 560 (tax exemption for urban renewal agency property, income, operations, added 1962)
• 20 NYCRR § 644.1(a) (MRT exemption for mortgages involving state/federal agencies and instrumentalities)

Case law cited in the opinion:

• Williamsburgh Power Plant Corp. v. City of New York, 255 A.D. 214 (2d Dep't 1938), aff'd 280 N.Y. 551 (1939)
• City of New York v. Tully, 88 A.D.2d 701 (3d Dep't 1982)
• Hotel Waldorf Astoria Corp. v. State Tax Commission, 86 A.D.2d 330, 334 (3d Dep't 1982)

Related opinions

• TSB-A-13(6)R — a companion opinion from the same date applying the same "later specific statute overrides Tax Law § 252" logic to a not-for-profit local development corporation's nominee-mortgagee financing structure.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mortgage_rec_ao_2013.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mortgage/a13_5r.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-13(5)R
Mortgage Recording Tax
October 3, 2013

Office of Counsel
Advisory Opinion Unit

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M130603B

The Department of Taxation and Finance received a Petition for Advisory Opinion from
the name redacted (Petitioner). Petitioner asks whether it is an agency, instrumentality, or
subdivision of New York State, and thus exempt from paying mortgage recording taxes when it
records a mortgage. We conclude that Petitioner is exempt.
Facts
Petitioner is a municipal urban renewal agency created pursuant to General Municipal
Law (GML) Articles 15, 15-A, and 15-B. As such, it is a corporate governmental agency,
constituting a public benefit corporation.1 Petitioner owns a parcel of real estate that it
contracted to sell to a not-for-profit corporation (Buyer). After the conveyance, Buyer will own
the property and direct the construction of low-income housing on the land. In order to advance
Buyer’s acquisition of the parcel, Petitioner will make a purchase money loan to Buyer and hold
a purchase money mortgage on the property. Petitioner will record this mortgage. Buyer
expects to receive final financing for the project from another lender and pay off the purchase
money mortgage in October 2013.
Analysis
Article 11 of the New York State Tax Law imposes taxes on the recording of mortgages
on real property, based on the principal debt or obligation secured by the mortgage being
recorded.2 Tax Law § 252 provides that “No mortgage of real property situated within this state
shall be exempt, and no person or corporation owning any debt or obligation secured by
mortgage of real property situated within this state shall be exempt, from the taxes imposed by
this article by reason of anything contained in any other statute. . . .” Although the mortgage
recording tax statute enumerates certain exemptions, none of the enumerated exemptions are
applicable here. 3 Other exemptions arise under the common law, and still others apply by
reason of statutory provisions outside of the mortgage recording tax statutes. Specifically, in
cases where a conflict exists between Tax Law § 252 and a specific enactment relating to the
same general subject matter, the later specific enactment takes precedence against a general
statute, and the prior general statute must yield to the later or specific statute. See Williamsburgh
Power Plant Corp. v. City of New York, 255 A.D. 214 (2nd Dept. 1938), aff’d 280 N.Y. 551
1
2

GML § 553.2.

Tax Law § 253.
3
Tax Law §§ 252, 252-a, 253.3.

-2-

TSB-A-13(5)R
Mortgage Recording Tax
October 3, 2013

(1939). Tax Law §252 was enacted prior to the applicable GML statutes. Finally, it is well
established that State agencies, instrumentalities or political subdivisions enjoy immunity from
the mortgage recording tax, independent of the statutory exemptions, for property used in the
public interest, on the theory that imposition of a tax upon a mortgage held by a State agency is
tantamount to a tax upon the agency itself in violation of its immunity from taxation. See City of
New York v. Tully, 88 A.D.2d 701 (3rd Dep’t 1982); Hotel Waldorf Astoria Corp. v. State Tax
Commission, 86 A.D.2d 330, 334 (3rd Dep’t 1982). This principle was adopted into § 644.1 of
the mortgage recording tax regulations that provide: “(a) The recording of the following
mortgages involving the State or the Federal Government is exempt from the taxes described in
Part 642 of this Title: (1) mortgages where the mortgagor or mortgagee in New York State or
any of its agencies, instrumentalities or political subdivisions, to the extent immune from such
taxation ....”
Petitioner is a municipal urban renewal agency, created pursuant to GML Articles 15,
15-A and 15-B, and declared by its enabling statute to be a governmental agency and
instrumentality.4 As such, it is deemed to serve a public purpose - in this instance, facilitating
the construction of new low-income housing - and, thus, is accorded rights and powers deemed
essential to the public interest for which public funds may be expended.5 The GML provides
that the property, income and operations of a municipal urban renewal agency are exempt from
taxation.6 Because the GML statutory exemption accorded Petitioner was enacted after Tax Law
§ 252 and is specific as to municipal urban renewal agencies such as Petitioner, as the later
enacted status, it will take precedence over Tax Law §252. See Williamsburgh Power Plant
Corp. v. City of New York, supra. If Petitioner records the mortgage given by Buyer, we
conclude that Petitioner is exempt from paying the mortgage recording tax.

DATED: October 3, 2013

NOTE:

4

An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.

GML § 553.2.
GML § 551.
6
GML § 560, as added by the Laws of 1962, c. 921, § 1.
5

/S/
DEBORAH R. LIEBMAN
Deputy Counsel