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
210 East 17th Street
$960,000
2 |
1
Flatiron
16 West 16th Street
$512,500
Studio |
1
Turtle Bay
335 East 51st Street
$500,000
Studio |
1
Lenox Hill
301 East 69th Street
$925,000
1 |
1
Beekman
12 Beekman Place
$720,000
1 |
1
Hell’s Kitchen
352 West 56th Street
$575,000
Studio |
1
Hell’s Kitchen
314 West 56th Street
$438,000
Studio |
1
Turtle Bay
235 East 49th Street
$520,000
1 |
1
Chelsea
200 West 20th Street
$565,000
Studio |
1
Upper West Side
233 West 99th Street
$675,000
1 |
1
Sutton Place
212 East 57th Street
$995,000
2 |
1
Upper West Side
250 West 90th Street
$799,000
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
Greenwood
179 20th Street
$995,000
1 |
1
Gerritsen Beach
26 Aster Court
$499,000
4 |
2
Bath Beach
1657 Bath Avenue
$845,000
3 |
1.5
Midwood
1972 Ocean Avenue
$650,000
2 |
2
Flatbush
177 East 31st Street
$979,000
7 |
3
Brighton Beach
1311 Brightwater Avenue
$575,000
1 |
1
Bergen Beach
1946 Bergen Avenue
$845,000
3 |
2
Brighton Beach
313 Brightwater Court
$429,000
2 |
1
Flatbush
2158 Beverly Road
$799,950
5 |
2
East New York
851 Glenmore Avenue
$589,000
Studio |
2
Brighton Beach
3392 Guider Avenue
$539,000
1 |
1
Homecrest
1877 East 12th Street
$420,000
2 |
1
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
23-28 30 Drive
$795,000
1 |
1
Jackson Heights
37-32 89th Street
$599,000
2 |
1
Sunnyside
50-29 48th Street
$899,900
4 |
2
South Richmond Hill
101-28 130th Street
$699,000
3 |
1
Springfield Gardens
179-21 143rd Avenue
$649,888
3 |
2.5
Hamilton Beach
99-65 165th Avenue
$750,000
2 |
1
Rego Park
64-00 Saunders Street
$510,000
2 |
1
Maspeth
57-54 75th Street
$938,000
5 |
2.5
Kew Gardens
83-71 116th Street
$450,000
1 |
1
Woodside
39-60 54th Street
$619,000
2 |
1
Ditmars-Steinway
21-77 33rd Street
$429,000
3 |
1
Woodhaven
88-23 75th Street
$639,000
3 |
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!