New York City Mansion Tax to Increase July 1

Back to Updates (Home)

 

New York State has had a so-called "mansion tax" since 1989. Prior to this year, it was an extra 1% added to the real estate transfer tax when the purchase price of a residential property exceeded $1 million. Unlike the regular transfer tax, which is paid by the seller, this additional transfer tax is due from the buyer.

 

Under the recently enacted New York State budget bill, rates are going up in New York City. Starting July 1, when a purchase price in the five boroughs reaches $2 million the additional transfer tax rises to 1.25%. It then increases through six more levels until it tops out at 3.9% for homes bought for $25 million or more. The old rate, a flat 1% on all purchases of $1 million or more, is retained for the rest of New York State.

 

Once a purchase price passes a threshold level, the entire price becomes subject to the higher rate. This leads to a "cliff" effect at certain price points where a small change in price can led to a disproportionate rise in the tax.

 

Like the old 1% tax, the increases apply to the sale of any city premises that may be used in whole or in part as a personal residence. This includes one-, two-, and three-family houses, condo units, and co-op apartments.

 

The new additional transfer tax rates for New York City are applied to purchase prices as follows: 

  • Less than $1,000,000 - none
  • $1,000,000 to $1,999,999 - 1.00%
  • $2,000,000 to $2,999,999 - 1.25%
  • $3,000,000 to $4,999,999 - 1.50%
  • $5,000,000 to $9,999,999 - 2.25%
  • $10,000,000 to $14,999,999 - 3.25%
  • $15,000,000 to $19,999,999 - 3.50%
  • $20,000,000 to $24,999,999 - 3.75%
  • $25,000,000 or more - 3.90%

 

Please contact your LM Cohen professional to determine how the mansion tax changes may affect your potential transaction. All our prior State Tax Alerts, and many topics about the Tax Cuts and Jobs Act, are available on the Updates page of our website.

 

 

Back to Updates (Home)