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
Beekman
434 East 52nd Street
$785,000
1 |
1
Upper East Side
150 East 83rd Street
$445,000
1 |
1
South Harlem
130 Lenox Avenue
$449,000
2 |
1
Sutton Place
350 East 54th Street
$765,000
2 |
1
Inwood
57 Park Terrace East
$450,000
2 |
1
Beekman
12 Beekman Place
$650,000
1 |
1
Lincoln Square
161 West 61st Street
$950,000
1 |
1.5
Greenwich Village
77 East 12th Street
$729,000
1 |
1
Financial District
123 Washington Street
$755,000
1 |
1
Lenox Hill
400 East 77th Street
$675,000
1 |
1
Lenox Hill
200 East 66th Street
$845,000
Studio |
1
Lincoln Square
140 West 71st Street
$725,000
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
Cypress Hills
37 Grant Avenue
$698,000
2 |
1.5
Bushwick
220 Schaefer Street
$465,000
1 |
1
Farragut
772 East 48th Street
$849,000
4 |
3
Fort Greene
1 Hanson Place
$850,000
1 |
1
Prospect Heights
786 Washington Avenue
$599,000
1 |
1
East New York
516 Fountain Avenue
$695,000
4 |
2
Kensington
428 East 9th Street
$880,000
2 |
2
Flatlands
1515 East 55th Street
$870,000
5 |
4.5
Prospect Heights
376 Saint John’s Place
$899,000
2 |
1
Bensonhurst
1502 West 1st Street
$809,000
2 |
2
Downtown Brooklyn
85 Livingston Street
$610,000
1 |
1
Flatbush
2233 Caton Avenue
$899,000
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
31-85 Crescent Street
$485,000
1 |
1
Whitestone
13-14 145 Place
$975,000
3 |
1
Forest Hills
67-76 Booth Street
$525,000
2 |
1.5
Hillcrest
164-36 76th Avenue
$968,000
4 |
2
Woodhaven
97-49 91st Street
$724,950
4 |
2
Jamaica Hills
161-24 84th Avenue
$950,000
4 |
3
Bay Terrace (Queens)
2 Bay Club Drive
$588,000
1 |
1
Bayside
35-21 211st Street
$999,000
3 |
2
Elmhurst
94-30 60th Avenue
$529,000
3 |
1.5
Long Island City
29-18 41st Avenue
$899,000
1 |
1
Forest Hills
76-35 113rd Street
$625,000
2 |
2
Hunters Point
42-44 Crescent Street
$950,000
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!