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
Lincoln Square
170 West End Avenue
$550,000
Studio |
1
Lincoln Square
165 West End Avenue
$950,000
1 |
1
Murray Hill
310 Lexington Avenue
$515,000
1 |
1
Lenox Hill
1175 York Avenue
$849,000
2 |
1
Battery Park City
377 Rector Place
$975,000
1 |
1
East Harlem
309 East 108th Street
$949,000
3 |
2
Hell’s Kitchen
305 West 52nd Street
$475,000
Studio |
1
Financial District
1 Wall Street Court
$599,000
Studio |
1
South Harlem
258 Saint Nicholas Avenue
$675,000
Studio |
1
Lincoln Square
1 Central Park West
$745,000
1 |
1
West Village
80 Charles Street
$995,000
1 |
1
Manhattan Valley
12 West 107th Street
$475,000
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
Canarsie
1336 East 99th Street
$839,000
4 |
2
Homecrest
3019 Avenue T
$949,000
3 |
1.5
East Flatbush
449 East 49th Street
$499,000
3 |
2
East New York
581 Vansiclen Avenue
$700,000
4 |
3
East Flatbush
282 East 35th Street
$450,000
2 |
1
Bergen Beach
1441 East 64th Street
$785,000
3 |
1.5
Midwood
1620 Avenue I
$439,000
2 |
1
Farragut
4617 Clarendon Road
$995,000
5 |
2
Brighton Beach
60 Oceana Drive West
$979,000
2 |
2
Coney Island
2915 West 5th Street
$475,000
2 |
1
Midwood
920 East 17th Street
$495,000
2 |
1
Flatlands
1530 East 51st Street
$649,000
2 |
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
Forest Hills
70-20 108th Street
$675,000
2 |
1
Rego Park
97-07 63 Road
$449,000
2 |
1
Forest Hills
78-29 Austin Street
$815,000
1 |
1
Woodside
40-22 61st Street
$695,000
1 |
1
Kew Gardens Hills
68-56 140th Street
$460,000
2 |
1
Hunters Point
2-26 50th Avenue
$929,000
1 |
1
Jackson Heights
34-24 82nd Street
$450,000
1 |
1
Jackson Heights
35-06 88th Street
$639,000
2 |
1
St. Albans
117-37 193rd Street
$679,000
3 |
1.5
Oakland Gardens
75-26 Bell Boulevard
$569,000
2 |
2
Rockaway All
171 Beach 100th Street
$825,000
3 |
2.5
College Point
126-04 Ninth Avenue
$883,000
3 |
2
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!