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
Chelsea
200 West 20th Street
$445,000
Studio |
1
Midtown
117 East 57th Street
$798,700
Studio |
1
Lower East Side
504 Grand Street
$849,000
2 |
1
Hell’s Kitchen
505 West 47th Street
$750,000
1 |
1
Manhattan Valley
205 West 103rd Street
$995,000
3 |
2
Yorkville
235 East 87th Street
$750,000
2 |
1
Sutton Place
303 East 57th Street
$550,000
1 |
2
Turtle Bay
225 East 46th Street
$999,999
1 |
1
Murray Hill
200 East 36th Street
$449,500
Studio |
1
Financial District
20 Pine Street
$979,000
1 |
1
West Chelsea
405 West 23rd Street
$685,000
Studio |
1
Turtle Bay
225 East 46th Street
$545,000
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
Canarsie
1440 East 91st Street
$950,000
7 |
3
Flatbush
75 Kenilworth Place
$975,000
5 |
3
Brooklyn Heights
277 Hicks Street
$695,000
1 |
1
Weeksville
1359 Saint John’s Place
$799,000
3 |
2
Seagate
4300 Atlantic Avenue
$485,000
1 |
1
New Lots
994 Van Siclen Avenue
$859,000
4 |
3
Brighton Beach
3015 Brighton 6th Street
$899,000
3 |
2
Midwood
622 Foster Avenue
$779,000
2 |
2
Midwood
2072 Ocean Avenue
$600,000
2 |
2
Prospect Park South
25 Parade Place
$759,000
1 |
1
Park Slope
115 8th Avenue
$550,000
1 |
1
Gravesend
8322 24th Avenue
$695,000
1 |
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
Flushing
138-35 39th Avenue
$880,000
1 |
1
Beechhurst
166-25 Powells Cove Boulevard
$799,000
2 |
2
Elmhurst
87-10 51st Avenue
$529,000
2 |
1
Elmhurst
87-10 51st Avenue
$499,999
2 |
1
Bay Terrace (Queens)
23-25 Bell Boulevard
$518,888
2 |
2
Sunnyside
48-10 45th Street
$495,000
2 |
1
Hunters Point
2-26 50th Avenue
$629,000
Studio |
1
Jackson Heights
34-42 80th Street
$890,000
2 |
2
Oakland Gardens
68-38 Springfield Boulevard
$485,000
3 |
1
Forest Hills
77-15 113th Street
$549,000
2 |
1
Forest Hills
69-60 108th Street
$459,000
2 |
1
Ridgewood
62-48 60th Place
$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!