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
Gramercy Park
230 East 15th Street
$515,000
Studio |
1
Flatiron
10 West 15th Street
$950,000
1 |
1
West Chelsea
410 West 23rd Street
$899,000
1 |
1
Washington Heights
159-34 Riverside Drive West
$525,000
1 |
1
Kips Bay
201 East 28th Street
$689,000
1 |
1
Washington Heights
159-34 Riverside Drive West
$799,000
1 |
1
Murray Hill
80 Park Avenue
$650,000
Studio |
1
Upper West Side
221 West 82nd Street
$789,000
1 |
1
Kips Bay
200 East 27th Street
$595,000
Studio |
1
Central Harlem
370 Lenox Avenue
$885,000
2 |
2
Inwood
687 West 204th Street
$499,000
1 |
1
Midtown South
139 East 33rd Street
$470,000
Studio |
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
Gravesend
2546 Stillwell Avenue
$528,000
2 |
1
Marine Park
1554 East 38th Street
$750,000
3 |
2
Marine Park
2156 Kimball Street
$799,000
3 |
1.5
Bedford-Stuyvesant
806 De Kalb Avenue
$689,000
1 |
1
Sheepshead Bay
3112 Emmons Avenue
$575,000
1 |
1
Gerritsen Beach
84 Bevy Court
$849,000
3 |
2
Midwood
852 East Seventh Street
$978,000
3 |
2
Bensonhurst
1807 66th Street
$676,500
1 |
1
Flatlands
1424 East 52nd Street
$759,000
3 |
2
Canarsie
1525 East 98th Street
$930,000
5 |
3.5
Brighton Beach
59A Ide Court
$900,000
5 |
2
Bushwick
1242 Hancock Street
$950,000
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
Astoria
14-23 31st Avenue
$449,888
1 |
1
Jackson Heights
34-30 81st Street
$899,000
3 |
2
Woodhaven
76-12 85 Drive
$625,000
3 |
2
Jackson Heights
35-25 77th Street
$469,000
1 |
1
Hunters Point
27-20 42 Road
$740,000
Studio |
1
Jamaica
111-25 147th Street
$729,000
3 |
3
Forest Hills
108-15 72nd Avenue
$791,025
1 |
1
North Corona
37-30 103rd Street
$446,000
2 |
1
Laurelton
138-48 229th Street
$850,000
3 |
2.5
Briarwood
135-46 Grand Central Parkway South Sr
$568,000
2 |
1
Astoria
28-20 Astoria Boulevard
$699,000
1 |
1
Richmond Hill
94-22 124th Street
$749,000
3 |
1.5
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!