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
Midtown
150 West 51st Street
$815,000
1 |
1
South Harlem
1330 Fifth Avenue
$699,000
1 |
1
Washington Heights
807 Riverside Drive
$465,000
1 |
1
Kips Bay
501 3rd Avenue
$999,000
Studio |
1
Yorkville
530 East 90th Street
$799,000
2 |
1
Lower East Side
475 FDR Drive
$688,888
1 |
1
Sutton Place
245 East 54th Street
$618,000
1 |
1
Hell’s Kitchen
408 West 57th Street
$520,000
Studio |
1
Financial District
1 Wall Street
$895,000
Studio |
1
Lenox Hill
142 East 71st Street
$689,000
2 |
1.5
Hamilton Heights
470 West 146th Street
$550,000
4 |
1
Lincoln Square
2025 Broadway
$715,000
1 |
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
Bedford-Stuyvesant
1240 Bedford Avenue
$650,000
2 |
1
Bedford-Stuyvesant
134 Quincy Street
$725,000
1 |
1
Brighton Beach
40 Oceana Drive
$900,000
2 |
2
Canarsie
665 Varkens Hook Road
$649,999
3 |
3
Canarsie
1559 Remsen Avenue
$574,900
3 |
2
Ocean Hill
369 Marion Street
$450,000
2 |
1
Greenpoint
100 Newel Street
$780,000
1 |
1
Park Slope
333 4th Street
$749,000
1 |
1
Bergen Beach
1091 East 72nd Street
$599,000
3 |
3
Brighton Beach
40 Br 1 Road
$475,000
2 |
1
Brighton Beach
3145 Brighton 04th Street
$449,000
1 |
1
Weeksville
72 Utica Avenue
$899,000
6 |
3
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
104-20 68 Drive
$769,000
3 |
2
Jackson Heights
33-44 Junction Boulevard
$489,000
2 |
1.5
Woodhaven
97-32 84th Street
$839,000
5 |
2
Forest Hills
118-17 Union Turnpike
$649,888
2 |
2
Middle Village
62-86 Dry Harbor Road
$969,000
3 |
2
Old Howard Beach
159-23 95th Street
$899,000
4 |
2
East Flushing
140-15 Holly Avenue
$508,000
3 |
2
St. Albans
194-56 114 Road
$849,000
4 |
2.5
St. Albans
172-04 Linden Boulevard
$850,000
3 |
2
South Jamaica
137-03 130th Avenue
$699,999
3 |
2.5
Jackson Heights
35-64 89th Street
$475,000
1 |
1
Jackson Heights
79-15 35th Avenue
$668,000
2 |
1
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!