Mansion Tax Calculations

The mansion tax applies to real property, I thought. An appliance is not real property if sold without real estate attached to it I would think. Furniture? And the mansion tax is paid by the buyer, no? Someone who buys a subzero and mixmaster or a Louis XV chair doesn't pay mansion tax. Can you explain what you are contemplating a bit more?

The mansion tax is based on the sale of a property that's it. If you sell the appliances prior, they do not need to be included in the overall cost.

The "Mansion Tax" law specifically prohibits splitting what is really a single real estate transaction into multiple pieces for no material purpose other than reducing the tax bite. You'll probably get away with it, but you have to ask yourself whether saving 1% of the value of some used appliances is really a big enough reward to justify the risk of a tax-evasion rap. Also, you'll need the acquiescence of attorneys on both sides; the law is quite explicit, so this sort of thing could get them reprimanded, or even disbarred.

Well, if someone were to propose something like that, it would probably not be 1% of the value of some used appliances they would be saving, but 1% of $1,000,000. Which, barring other concerns, would seem to be a worthwhile investment, 1% of $1,000,000 versus some additional paperwork. However, if something like that is specifically prohibited, it would seem to be a question of 1% of $1,000,000 versus various penalties and fines, not to mention criminal charges, which doesn't seem as good on balance. Thanks for the information, you don't happen to know the legal citation do you?

The Division of Taxation and the Tax Appeals Tribunal have consistently ruled (surprise, surprise) that the Mansion Tax applies to all related transactions if the total consideration is $1MM or more. You're especially at risk if your purchase is in the barely-under-a-million range because - as one would expect - those transactions get most of the scrutiny.

It's a really crappy law, and it's poorly crafted. The sudden jump from zero tax to $10,000 at the $1MM price point makes very little sense, and creates a huge incentive for bad behavior. Do what you feel comfortable doing. My personal take is that if you can afford $1MM, you can afford to pay the taxes you legally owe, even if the law fundamentally stinks.

I thought the amount of the mansion tax was based on the purchase/sales price of the real property. If you are looking to buy a property that's furnished, I think what makes the most sense is to buy the furnishings separately. I think separating appliances is a stretch since appliances are usually conveyed with the property. Fixtures such as window treatments, etc. sometimes are excluded, so would think it would be ok to buy them separately as personal property... likewise for furniture. What the tax authorities will likely focus on is what the purchase price of the real property and permanent fixtures conveyed is (ie, what's recorded and what you're financing with your mortgage). I believe the prohibition on splitting transactions really has to do with splitting real property transactions. So, for example, if you were to buy two units in the same building and tried to split the transaction into two separate transactions to avoid paying the tax, the tax authorities would likely scrutinize/penalize. Anyhow, best course is to ask your lawyer.