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
Washington Heights
159-34 Riverside Drive West
$874,000
2 |
1
Yorkville
302 East 88th Street
$925,000
2 |
1
Hell’s Kitchen
305 West 55th Street
$899,000
1 |
2
Lenox Hill
785 Park Avenue
$975,000
1 |
1.5
Murray Hill
211 East 35th Street
$425,000
1 |
1
Greenwich Village
77 East 12th Street
$800,000
1 |
1
Lenox Hill
27 East 65th Street
$995,000
2 |
2.5
Fulton/Seaport
99 John Street
$628,000
Studio |
1
Hudson Heights
860 West 181st Street
$699,000
2 |
1
Flatiron
69 Fifth Avenue
$650,000
Studio |
1
Greenwich Village
101 West 12th Street
$735,000
Studio |
1
Hell’s Kitchen
431 West 54th Street
$425,000
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
Williamsburg
29 Montrose Avenue
$650,000
1 |
1
DUMBO
51 Jay Street
$975,000
1 |
1
Park Slope
350 Butler Street
$625,000
Studio |
1
Gravesend
2286 Cropsey Avenue
$995,000
2 |
2
Fort Hamilton
9201 Shore Road
$400,000
1 |
1
East New York
326 Berriman Street
$688,888
3 |
2.5
Cobble Hill
177 Amity Street
$599,000
1 |
1
Carroll Gardens
450 Clinton Street
$850,000
1 |
1
Williamsburg
2 Northside Piers
$975,000
Studio |
1
Weeksville
1294 Saint Marks Avenue
$749,999
3 |
1
East New York
925 Dumont Avenue
$999,000
8 |
5
East Flatbush
1169 Brooklyn Avenue
$890,000
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
Cambria Heights
116-36 234th Street
$699,999
4 |
1
Rosedale
256-12 147th Avenue
$975,000
5 |
3
Glendale
75-16 64 Place
$999,000
6 |
2
Rego Park
61-25 98th Street
$624,999
3 |
2
Jackson Heights
77-11 35th Avenue
$445,000
1 |
1
Jackson Heights
83-10 35th Avenue
$750,000
2 |
1
St. Albans
173-43 103 Road
$789,000
4 |
3.5
Jackson Heights
34-41 85th Street
$419,000
1 |
1
Forest Hills
64-34 Grand Central Parkway
$669,000
2 |
2
Long Island City
33-10 38th Avenue
$675,000
1 |
1
Long Island City
33-10 38th Avenue
$625,000
1 |
1
Long Island City
33-10 38th Avenue
$675,000
1 |
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!