Any strategies to avoid mansion tax?

You pay it. It's the law.

pay for the "personal property" they are selling to get the price down.

we offered to pay for the ny state & city transfer tax (which is typically paid by the seller, if not sponsor sale). the broker also asked us to pay for the seller's broker commission.

I had this this pay for personal property thing suggested by a listing broker recently, I can't imagine this is legal so check with your attorney. Personally I don't think it is a good idea, also the buyers attorney told us that the AG's office was looking closer at deals that just skirt the "mansion tax", I cannot confirm that but this what he told the buyers.

With our business model we have given up a point on the commission to cover such tax, in one case by taking a point less the seller actually wrote the check (buyer was light on funds).

Keith Burkhardt
The Burkhardt Group

How about your income tax? Would you like some suggestions about how to cheat on that too?

Don't buy a mansion.

There's really no way around it. If the buyer pays the taxes the seller usually pays, they're treated as consideration to the seller and included in the taxable amount.

The buyer and seller aren't the ones completing the closing statement the city uses to calculate tax. You can't ask whoever does do it to set themselves up for penalties just to save you 1%.

>Any strategies to avoid mansion tax?

1) Rent
2) Buy something under a million dollars
3) Don't pay and spend a year or two in jail. Or just say your with Charles Rangel

Just write it off as a business expense.

Just write it off as a business expense.

I have no intention to skirt the law or do anything illegal. I just noticed that many properties seem to close at $999,000 which seems like something must be going on where many people have figured out a legit way to avoid this tax. But if the only way to do it is some shady under-the table stuff, it's really not worth the stress. Thanks.

>I just noticed that many properties seem to close at $999,000 which seems like something must be going on where many people have figured out a legit way to avoid this tax.

Yes, they agree a deal under $1MM.

Nothing suspicious. Laws, regulations and taxes change people's behavior.

An apartment closing at $999,000 still pays the mansion tax, I am told. I don't recall what exactly gets added into the calculation of the selling price, but I was told to avoid the mansion tax, you need to have a selling price of less than about $980,000 or so. Maybe others know the exact details but be careful if you buy a place for $999,000 that you don't end up paying the mansion tax anyway.

The Op just demonstrate that the top 1% favorite sport is tax evasion! He can afford a Million $ house but he doesn't want to pay taxes ! Boooh! I'm glad the IRS decided to rise audits on these people!

Please note that I believe that if a buyer pays the transfer taxes, the purchase price must be grossed up by the amount of such transfer taxes (and the transfer taxes must be paid on such grossed up amount). Best to confirm this with your atty as well.

I should of stated there are ways to offset the tax, it can't be "avoided".

The 980 limit is when you're buying from a sponsor, because you'll be paying the 1.425% and .4% transfer taxes and they'd push you over a million.

$999,000 seems to work, as long as you're not paying anything the seller is supposed to pay. See these 69 over the last year, with no mansion tax: http://streeteasy.com/nyc/closings/nyc/price:999000%7Crecorded%3C365

The same query with 1000000 instead of 999000 turns up 42 transactions, but the very few apartments among them aren't arms-length or are flagged "special circumstances."

The advice regarding the "mansion tax" provided here was very helpful.

But since a couple of comments were less than complimentary towards the original questioner, I wanted to clarify something: this tax was put in place in 1989 to tax the wealthy folks who were buying million dollar mansions. Back then, you could buy a 5-bedroom, two-story town house with that money and still have something left over! Today, with real estate prices at an average of $1,100 per square foot on the Upper West Side, for example, all you can get for $1,000,000 (before taxes and closing costs) is a 910 sq ft apartment, which in many cases will only have one bedroom, or two smaller bedrooms. It is certainly no "mansion"!

However, given that no politician wants to run on a platform of letting "rich" folks buy their million-dollar homes tax-free, this law (which has now become outdated and absurd) will likely never get updated. It is more money for the State (so why would they raise the threshold) and no one else dare talk about the (literally) poor people who can't afford it.

So before you criticize someone for trying to buy a "mansion" and worrying about paying $10k extra, remind yourself that he/she is buying a hole in the wall compared to what $1 million would buy you elsewhere in the country. Sure, they can always choose to move, but then again, if you call a place home, how easily are you willing to uproot your family, and what are you willing to sacrifice to make it work? I guess the answer is different for each of us.

...as most of you don't know (it seems that way), Mansion tax is not really tax...that's why it's not tax deductible...it is just another way for 'them' to take our money....so, if one tries to avoid paying it, nothing immoral about that....selling personal property is probably the best way to go about it.....

To avoid paying it NOW, can't you have the seller pay it and buy the home for 10k more? I mean, you're not avoiding it, but you are folding it into your mortgage then. That 10K adds a lot the down payment+closing.

This is what you do: once you identify the place you want, come to an agreement with the seller that you will finance the purchase price over the next year. Then, twice a week, every week for the next 50 weeks (almost a year, but two weeks off for vacation), go to the bank and withdraw $9,999 in cash and give the cash to the seller to redeposit in his bank. Since each cash deposit and withdrawal is below $10,000, and your total purchase price is below $1,000,000, the federal and state government won't care and everything will be great for everyone involved - they really aren't focused on money and just prefer that its citizens (and non citizens too, the dream act!) have life, liberty, and the ability to pursue happiness, not to mention free healthcare.

Unfortunately, I can't offer any advice on how to avoid the mansion tax. But I do think it is an outdated concept that does not make much sense today. "Mansion" now includes the majority of units in Manhattan.

The Mansion Tax also makes homes valued just over $1M more difficult to sell.
http://www.nber.org/papers/w20084

Repeated cash withdrawls just under the $10k threshold, or a set of transactions that look like you are structuring activity to avoid reporting are typically flagged by banks as 'suspicious activity', and they are required to file a SAR.

I hated the mansion tax, but it actually helped me in my recent house hunt in the suburbs of long island.
Been looking for a sub-million home in the north shore of long island since 2012, and have lost multiple bids.
Finally put a bid for a house thats $1,025,000, and it got accepted without competition. Seems like there is psychologic aversion to paying that 10k to Uncle Sam. I had that aversion also, but I was so sick of house hunting that its worth the 10k in taxes to get that house without loosing out to multiple bidders.

And they need to raise to mansion tax threshold to like $2million.
I can rest assure that although the house I am going into contract with just north of a million is nice, its definitely NOT a mansion. Neither is your typical NYC 1000 sq ft apt that typically gets hit with this stupid tax.

"Only the little people pay taxes."
--Leona Helmsley

That's the spirit Pencap, taxes should apply just over your level.

The mansion tax is outdated and a burden primarily to the middle class.

For all the riff raff screaming about "tax avoidance", I wonder how much in actual taxes they pay? It's ok for them to use all kinds of rent control laws, game the system, not pay taxes on ALL their purchases. But not ok for someone to try to avoid paying the tax.

And by the way, if I price my home at 999,999.99, I have EVERY LEGAL RIGHT to not pay the mansion tax to NY. They did not put the limit at 999,999.99. They put it at 1,000,000.00. You would have known this if you took even one finance,accounting, law class in college instead of "ethnic studies. "

Well at least JWL is an equal opportunity a**hole.

If condos and co-ops are assessed as income units, why are they subject to a mansion tax? As 4 family properties are not subject to mansion tax, but 1-3 units are..... Just a question..

Silly cave. Trying to find logic in taxes.
You price jumps by a $1 and suddenly, you owe govt 1% mansion tax!
$1mm is mansion in NY which has not been inflation adjusted for ever!!

Treating as income properties is just a calculation to access taxes which are arbitrary any way. Single family get accessed at 6% of market value and coop condos at 45%!!

Wait there is actually some for your last question. 4 family properties have higher transfer taxes than 1-3 units so that it is roughly equal.

assess taxes.

The only quasi " logic" on hitting up the "rich" is that they have more then you . Its popular, and what are the they going to do anyway ? the trick though is to squeeze as much out short of some reaction like them moving away.

It is an old tax, put in place at a time when you were actually truly 'rich' if you could afford to pay $1M for a co-op. Not the case anymore.

Keith Burkhardt
TBG

Think of it as an exemption for those few buying under $1MM these days.

Everyone should pay. Everyone should have a stake in the game.

This whole thread about $10,000?

Most obvious way is through a buyer agent rebate. You get 1% cash back after closing from your buyer agent's commission. Think of it like a more generous closing gift.

Doesn't that cancel out your 1% Mansion Tax? Or you could buy a cheaper home...