Form IT-256-I: Instructions for Form IT-256 Claim for Special Additional Mortgage Recording Tax Credit (Tax Year 2025)

Form IT-256-I contains the official instructions issued by the New York State Department of Taxation and Finance for completing Form IT-256, Claim for Special Additional Mortgage Recording Tax Credit. This credit exists because New York imposes a special additional mortgage recording tax on most mortgages secured by real property in the state, and certain taxpayers who paid that tax may be eligible to recover part or all of it through their personal income tax return.

The special additional tax is separate from the regular mortgage recording tax, and not every borrower pays it in the same way. In many cases, lenders who are subject to New York franchise tax absorb this cost, and the credit is designed to offset that expense. Individual taxpayers, including partners in a partnership and shareholders in an S corporation, can claim the credit if they or their pass-through entity paid the special additional mortgage recording tax on a mortgage related to residential real property.

Who Needs Form IT-256-I

You generally need to consult these instructions if you took out a mortgage on real property located in New York State and the special additional mortgage recording tax was charged as part of the closing costs. This typically applies to homeowners, but it can also apply to members of partnerships or shareholders of S corporations that hold real property subject to this tax. If your mortgage lender or closing attorney separately itemized the special additional tax on your settlement statement, that’s usually a sign you should look into this credit.

It’s worth noting that this credit is nonrefundable in most cases for corporations, but individuals can claim a refund of any unused credit, subject to specific rules explained line by line in the instructions. Because the calculation depends on factors like the amount of tax paid, the type of property, and whether the mortgage was recorded in New York City or elsewhere in the state, reading the full instructions before filling out Form IT-256 is essential to avoid errors.

When to Use This Form

Form IT-256 is filed together with your New York State personal income tax return for the tax year in which the special additional mortgage recording tax was paid. For tax year 2025, that means attaching it to your 2025 IT-201 or IT-203 return when you file. If you’re also claiming other New York credits in the same filing season, such as the credit described in the Form IT-252-I instructions for the Investment Tax Credit for the Financial Services Industry, you’ll want to keep your supporting documentation organized since several New York credit forms require similar backup, like closing statements or lender confirmations.

Taxpayers who changed their residency status during the year should also check whether their situation intersects with rules covered in Form IT-260-I on special accruals for resident status changes, since mortgage-related credits can interact with part-year residency calculations in ways that aren’t always obvious from the main IT-201 instructions alone.

How to Get and Complete Form IT-256-I

Form IT-256-I is not fillable online. Like most New York tax instruction booklets, it’s distributed as a printable PDF that you download, print, and use as a reference while completing the paper or software-generated Form IT-256 by hand or through approved tax preparation software. The official version for tax year 2025 is published directly on the New York State Department of Taxation and Finance website.

Before starting, gather your mortgage closing documents showing the special additional mortgage recording tax amount, your prior year IT-256 if you’re carrying forward any unused credit, and your Social Security number or entity identification information. The instructions walk through each line of the form, including how to calculate the credit percentage based on your specific mortgage recording details and how to handle carryovers if the credit exceeds your tax liability for the year.

If you’re a business owner claiming multiple New York credits this filing season, it may also help to compare your paperwork against other credit instructions, such as those found in Form IT-248-I for the Empire State Film Production Credit, since New York often uses parallel formatting and documentation requirements across its various tax credit instruction booklets, which can make cross-referencing easier when you’re filing several credits in the same return.