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
Yorkville
345 East 80th Street
$835,000
1 |
1
Lincoln Square
185 West End Avenue
$829,000
1 |
1
Midtown
1600 Broadway
$679,000
Studio |
1
Murray Hill
35 East 38th Street
$775,000
1 |
1
Hell’s Kitchen
300 West 53rd Street
$999,000
2 |
1
Morningside Heights
400 Riverside Drive
$450,000
1 |
1
Hell’s Kitchen
325 West 45th Street
$895,000
2 |
1
Lenox Hill
308 East 79th Street
$600,000
1 |
1
Yorkville
400 East 90th Street
$699,000
1 |
1
Turtle Bay
255 East 49th Street
$850,000
1 |
1.5
Yorkville
75 East End Avenue
$815,000
1 |
1
Greenwich Village
1 Minetta Street
$720,000
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
Ditmas Park
616 East 18th Street
$525,000
1 |
1
East Flatbush
1200 East 49th Street
$795,000
4 |
3
Borough Park
1238 63rd Street
$938,000
2 |
2
Borough Park
1238 63rd Street
$898,000
2 |
2
Flatlands
1630 East 52nd Street
$874,999
3 |
2
Flatlands
1122 East 57th Street
$999,999
5 |
3
Flatlands
6107 Avenue T
$750,000
3 |
1
Brooklyn Heights
55 Pineapple Street
$545,000
Studio |
1
New Lots
941 Crescent Street
$975,000
6 |
4
Bensonhurst
8320 Bay Parkway
$475,000
3 |
1
Downtown Brooklyn
85 Livingston Street
$925,000
2 |
1
Homecrest
2518 Ocean Avenue
$729,000
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
Woodside
63-11 Queens Boulevard
$649,000
2 |
1
Jackson Heights
34-41 85th Street
$549,000
2 |
1
Hillcrest
69-06 Fresh Meadow Lane
$998,000
4 |
3
Queens Village
106-25 215th Street
$780,000
4 |
2
Hammels
162 Beach 92nd Street
$899,000
3 |
3
North Corona
34-17 103rd Street
$529,000
2 |
2
Queens Village
90-23 210th Street
$849,000
4 |
2
Kew Gardens Hills
141-12 78th Avenue
$449,980
2 |
1
Murray Hill (Queens)
148-09 Northern Boulevard
$835,000
2 |
2
Hunters Point
46-30 21st Street
$705,000
1 |
1
Murray Hill (Queens)
148-09 Northern Boulevard
$750,000
2 |
1
Corona
57-50 Granger Street
$599,000
3 |
2
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!