If you’ve already reviewed our guide to closing on an NYC apartment, you may be ready to take the next steps toward home ownership in New York. Just like any big purchase, the cost of a new home is often greater than its sticker price. From legal fees to insurance to pre-paid maintenance charges, it’s important to consider any closing costs up front. Similarly, if you’re buying a home in New York, it’s worth learning about the New York State Mansion Tax and how it may impact your overall expenses when closing on your dream home.
What Is the Mansion Tax?
The New York State Mansion Tax (sometimes incorrectly referred to as the NYC Mansion Tax) is a transfer tax for residential property purchases in excess of $1 million. Applicable to any property that may be used in whole or in part as a personal residence, this includes condos, co-ops, and one-to-three-family houses. The Tax must be paid within 15 days of closing and is therefore typically paid at the closing table.
How Much Is the Mansion Tax?
Originally instituted by Governor Mario Cuomo in 1989 at a flat rate of 1%, the Mansion Tax remained unchanged for more than 30 years. In the 2020 State Budget, it was transitioned to a progressive tax, with rates ranging from 1% to 3.9%, depending on the purchase price:
Who Pays the Tax, and Can it Be Avoided?
The New York State Mansion Tax is typically paid by the buyer or grantee (a person who obtains real estate property as a result of a conveyance). It can be paid by the seller if agreed upon in the contract terms, though this is less common.
If the buyer doesn’t pay the tax or is exempt, the seller or grantor (a person who transfers real estate property via a conveyance) must pay instead. If the tax becomes the seller's burden due to the buyer’s failure to pay, it is deemed the joint and several liability of both the seller and buyer.
Does this sound like a lot of math? We get it. Whether you’re buying or selling in New York, reach out to Byson to connect with a motivated agent who knows the ins and outs of the local real estate market. Byson agents can provide guidance from the start of your search all the way to closing; we love helping people find their next favorite place to call home.