As Dolly Parton famously said, “It costs a lot of money to look this cheap.” Unfortunately, it costs a lot of money to look rich, too. Just ask anybody who has had to pay the NYC mansion tax — it is one of the most significant closing costs associated with buying an expensive home.
Table of Contents
Manhattan Homes Under $999K on StreetEasyArticle continues below
South Harlem
208 West 119th Street
$625,000
2 |
1
Hell’s Kitchen
340 West 57th Street
$560,000
Studio |
1
Murray Hill
630 First Avenue
$900,000
1 |
1
Gramercy Park
201 East 21st Street
$700,000
1 |
1
Hamilton Heights
345 West 145th Street
$410,000
1 |
1
Yorkville
400 East 85th Street
$699,000
1 |
1
Upper East Side
150 East 83rd Street
$425,000
1 |
1
Washington Heights
834 Riverside Drive
$435,000
1 |
1
Lenox Hill
1420 York Avenue
$445,000
Studio |
1
Manhattanville
575 Riverside Drive
$460,000
1 |
1
Upper West Side
269 West 72nd Street
$430,000
Studio |
1
Sutton Place
212 East 57th Street
$995,000
2 |
1
When Was the Mansion Tax Introduced?
Created in 1989 by Governor Mario Cuomo, New York’s original mansion tax was a flat, 1% tax on statewide homes sales of $1 million or more. For example, back then, if a house, co-op, or condo sold for $1.25 million, the buyer would have paid a tax of $12,500. Sure, that seems like chump change compared to the purchase price. But if you do the math, it’s like treating yourself to a dollar bagel every single morning for — wait for it — four years. That’s a lot of bagels!
In 2019, the mansion tax was increased with a supplemental tax — but only for homes in New York City — as a funding mechanism for upgrading MTA subways.
“First-time NYC home buyers are usually surprised by the mansion tax. So it’s important for agents to educate buyers when discussing the buyer’s ‘price range’ in their real estate search,” says Kimberly T. Hastie, a licensed associate real estate salesperson at Brown Harris Stevens Residential Sales. “Best to identify this upfront to avoid last-minute surprises!”
Brooklyn Homes Under $999K on StreetEasyArticle continues below
Brighton Beach
40 Brighton 1st Road
$525,000
1 |
1
Sunset Park
255 50th Street
$799,900
4 |
3
Marine Park
4209 Quentin Road
$679,000
2 |
1
Borough Park
1238 63rd Street
$599,000
1 |
1
Borough Park
1238 63rd Street
$530,000
1 |
1
Brighton Beach
3022 Brighton 1st Street
$925,000
4 |
3.5
Sheepshead Bay
3144 Emmons Avenue
$999,000
2 |
2
Fort Greene
1 Hanson Place
$850,000
1 |
1
East New York
572 Jerome Street
$675,000
4 |
3
Bay Ridge
6735 Ridge Boulevard
$485,000
2 |
1
Flatlands
1375 East 54th Street
$999,000
8 |
3
East New York
178 Crystal Street
$749,000
5 |
2
How Much Is the Mansion Tax in NYC?
If you have to ask, you can’t afford it. (Kidding!) Buyers of personal residences pay a statewide mansion tax of 1% for property purchased for $1 million or more. However, for properties in New York City, a new, additional supplemental tax on the mansion tax applies to the buyer. This extra tax rate will rise incrementally with residential real estate properties with purchase prices of $2 million or more, capping out at a total of 3.90% for properties sold at $25 million or above. That’s a lot of Benjamins.
Here’s some math
Let’s say you decide to treat yourself to a $7,000,000 condo in Tribeca. The supplemental tax rate due is 1.25% (a whopping $87,500), in addition to a 1% mansion tax of $70,000. Refer to this handy chart below.
Purchase Price
Mansion Tax
Less than $999,999
0.00%
$1,000,000 – $1,999,999
1.00%
$2,000,000 – $2,999,999
1.25%
$3,000,000 – $4,999,999
1.50%
$5,000,000 – $9,999,999
2.25%
$10,000,000 – $14,999,999
3.25%
$15,000,000 – $19,999,999
3.50%
$20,000,000 – $24,999,999
3.75%
$25,000,000 or more
3.90%
Who Pays the Mansion Tax in New York?
The buyer customarily pays the NYC mansion tax within 15 days of closing on the home. However, if a buyer doesn’t pay or is exempt, the seller must cover it according to the Department of Taxation and Finance. Why? If a buyer failed to pony up, the mansion tax becomes a joint responsibility, or in legalese, a several liability of the seller and buyer — sort of like having a roommate on the tax debt.
Queens Homes Under $999K on StreetEasyArticle continues below
Rego Park
97-37 63 Road
$425,000
2 |
1
Glen Oaks
269 Grand Central Parkway
$579,000
1 |
1.5
Glen Oaks
270-10 Grand Central Parkway
$595,000
1 |
1.5
Glen Oaks
269 Grand Central Parkway
$849,000
2 |
2.5
Glen Oaks
27010 Grand Central Parkway
$439,000
1 |
1.5
Astoria
31-19 29th Street
$660,000
1 |
1
Astoria
31-19 29th Street
$570,000
Studio |
1
Forest Hills
68-20 Burns Street
$595,000
3 |
1
North Corona
108-20 34th Avenue
$999,000
4 |
2
Springfield Gardens
189-16 Williamson Avenue
$875,000
4 |
2.5
Astoria
25-40 Shore Boulevard
$725,000
1 |
1
Kew Gardens Hills
144-14 Melbourne Avenue
$830,000
4 |
2.5
Does the Mansion Tax Affect Co-ops, Condos, and Townhouses?
Yes. The mansion tax affects all residential property in New York, including condos, co-ops, and townhouses or brownstones. Mixed-use properties, such as a unit above a retail shop, also counts.
How Is the Mansion Tax Affecting the NYC Real Estate Market?
Nope. While the mansion tax is called a “tax,” it is not deductible. “Mansion tax is not deductible on the federal tax return, but it does increase the tax basis of your property,” says Xintian Wang, CPA, a manager at Dimov Tax Specialists. “The increase in the tax basis will ultimately reduce the capital gains you will have when you sell the property.” So, you may see a little boost on the back end when you go to sell.
And don’t forget another perk. If you have to pay the mansion tax, even if you bought a $1.1 million studio (it happens), you get to tell all your friends you just bought a mansion. Heyo!