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
South Harlem
258 West 117th Street
$450,000
2 |
1
Yorkville
309 East 87th Street
$795,000
2 |
1
Murray Hill
25 Tudor City Place
$655,000
1 |
2
Lenox Hill
326 East 73rd Street
$435,000
1 |
1
Tribeca
275 Greenwich Street
$999,900
1 |
1
Greenwich Village
77 Bleecker Street
$500,000
Studio |
1
West Chelsea
405 West 23rd Street
$600,000
Studio |
1
NoMad
43-45 East 30th Street
$829,000
1 |
1
Hudson Heights
120 Cabrini Boulevard
$599,000
1 |
1
Lower East Side
208 East Broadway
$750,000
1 |
1
Lenox Hill
235 East 73rd Street
$515,000
Studio |
1
Chelsea
170 West 23rd Street
$595,000
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
Prospect Park South
500 Ocean Avenue
$750,000
3 |
1
Coney Island
2823 West 37th Street
$649,000
3 |
1.5
Prospect Lefferts Gardens
77 Clarkson Avenue
$725,000
1 |
1
East New York
134 Fountain Avenue
$950,000
5 |
3
Vinegar Hill
85 Hudson Avenue
$850,000
1 |
1
Cobble Hill
439 Hicks Street
$515,000
1 |
1
Park Slope
145 Prospect Park West
$799,999
Studio |
1
Midwood
1494 Ocean Avenue
$600,000
2 |
1
Brighton Beach
35 Sea Coast Terrace
$475,000
1 |
1
Coney Island
501 Surf Avenue
$465,000
1 |
1
Windsor Terrace
221 Mcdonald Avenue
$665,000
2 |
1
Flatbush
338 East 22nd Street
$999,000
5 |
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
Queens Village
88-35 Vanderveer Street
$889,000
3 |
2
Elmhurst
46-06 88th Street
$549,000
1 |
1
Jackson Heights
84-12 35th Avenue
$450,000
1 |
1
Flushing
39-16 Prince Street
$958,000
2 |
2
Astoria
21-66 33 Road
$565,000
2 |
1
Kew Gardens Hills
78-06 Main Street
$449,980
2 |
1
Elmhurst
85-14 Broadway
$420,000
2 |
1
St. Albans
118-15 192nd Street
$579,000
3 |
1.5
Jackson Heights
88-10 34th Avenue
$465,000
2 |
1
Maspeth
61-12 69th Street
$648,000
2 |
2
Rego Park
92-29 Queens Boulevard
$640,000
2 |
1.5
Beechhurst
9-15 166th Street
$475,000
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!