1. (a) The real estate transfer tax shall be paid by the grantor. If the grantor has failed to pay the tax at the time described in section 575.14 of this Part or if the grantor is exempt from the tax, the grantee will have the duty to pay the tax. Where the grantee has the duty to pay the tax because the grantor has failed to pay, the tax is the joint and several liability of the grantor and the grantee.

   1. (1) Tax paid by grantee. Where a grantee agrees, as part of the consideration for the conveyance, to pay the transfer tax imposed by section 1402 of the Tax Law and described in section 575.2 of this Part, the tax is computed as follows:

      1. (i) Compute the tax based upon consideration exclusive of the transfer tax liability assumed by the grantee.

      2. (ii) Add the tax computed under (i) to the consideration used in (i) and compute the tax on the total amount. Example 1:

         Example 1:

         A one-family house, which is the grantor's residence, is sold for $2,000,000. There are no liens or other encumbrances on the property at the time of conveyance. The sales contract provides that the grantee will pay the transfer tax for the grantor. The grantee would compute the tax as follows:

         $2,000,000 ÷ $500 = 4,000 × $2 = $8,000

         $2,008,000 ÷ $500 = 4,016 × $2 = $8,032 Tax Due

   2. (2) The payment of the transfer tax by the grantee for the grantor would also constitute additional consideration to the grantor in computing the additional tax imposed by section 1402-a of the Tax Law on the grantee. Example 2:

      Example 2:

      Assume the same facts as in Example 1. The grantee would compute the additional tax as follows:

      Consideration	$2,000,000
      Transfer tax paid by grantee	8,032
      Total consideration	$2,008,032
      Tax rate	× .01
      Additional tax due	$20,008.32

      (c)

   3. (1) The additional tax shall be paid by the grantee. If the grantee is exempt from such tax, the grantor has the duty to pay the tax.

   4. (2) Additional tax paid by grantor. Where the grantee is personally liable for payment of the additional tax imposed by section 1402-a of the Tax Law and described in section 575.3 of this Part, payment of the tax by the grantor is considered to be an expense connected with the conveyance of the property. The consideration received by the grantor cannot be reduced by the amount of additional tax paid by the grantor. Example:

      Example:

      A one-family house, which is the grantor's residence, is sold for consideration of $1,400,000. The sales contract provides that the grantor will pay the additional tax for the grantee. The grantor would be required to pay additional tax of $14,000 (.01 × $1,400,000). The grantor would also be liable for payment of transfer tax in the amount of $5600 ($2 for each $500, or fractional part thereof, of consideration of $1,400,000).

   (b)

2. (d) All conveyances are presumed taxable. Where the consideration paid, or required to be paid, includes property other than money, the consideration is presumed to be the fair market value of the real property or interest therein. These presumptions may be rebutted by the person liable for payment of the tax.

Tax Law, § 1404