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
Hell’s Kitchen
646 Ninth Avenue
$600,000
1 |
1
Beekman
415 East 52nd Street
$795,000
1 |
1
Sutton Place
245 East 54th Street
$650,000
1 |
1
Yorkville
1760 Second Avenue
$899,999
1 |
1.5
Upper West Side
235 West 102nd Street
$695,000
1 |
1
Midtown South
220 Madison Avenue
$515,000
Studio |
1
Gramercy Park
235 East 22nd Street
$699,000
1 |
1
South Harlem
300 West 122nd Street
$775,000
1 |
1
Lenox Hill
177 East 77th Street
$750,000
1 |
1
West Village
270 West 11th Street
$850,000
1 |
1
Upper West Side
2109 Broadway
$995,000
1 |
1
Murray Hill
2 Tudor City Place
$550,000
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
Stuyvesant Heights
327 Mac Donough Street
$950,000
2 |
1
Windsor Terrace
346 Coney is Avenue
$899,000
2 |
2
Canarsie
1377 East 104th Street
$750,000
3 |
2
Park Slope
264 Sixth Avenue
$600,000
1 |
1
Brighton Beach
150 Oceana Drive West
$849,000
2 |
2
Park Slope
241 16th Street
$725,000
1 |
1
Bensonhurst
1820 73rd Street
$768,000
2 |
2
Brooklyn Heights
75 Henry Street
$695,000
1 |
1
Sunset Park
4018 Eighth Avenue
$650,000
3 |
1
Brighton Beach
40 Oceana Drive
$889,000
3 |
2
East New York
982 Dumont Avenue
$949,000
6 |
3
Bushwick
1198 Jefferson Avenue
$965,000
3 |
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
Middle Village
64-15 78th Street
$899,000
3 |
1.5
College Point
3-13 Weatherly Place
$778,800
2 |
2
Elmhurst
91-23 Corona Avenue
$558,000
2 |
1
Sunnyside
45-08 40th Street
$600,000
2 |
1
Cambria Heights
119-46 238th Street
$899,000
4 |
3
Hunters Point
44-15 Purves Street
$895,000
1 |
1
Springfield Gardens
185-11 Nashville Boulevard
$769,900
3 |
3
Forest Hills
72-10 112nd Street
$499,500
2 |
1
Astoria
32-86 41st Street
$860,000
1 |
1
Middle Village
60-70 Woodhaven Boulevard
$590,000
2 |
2
Ozone Park
84-13 108th Avenue
$779,998
3 |
2
Jackson Heights
35-50 85th Street
$410,000
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!