NYC Mansion Tax: Rates, Brackets and Who Pays

New York’s mansion tax is a one-time tax of 1% of the price when you buy a home for $1 million or more, and in New York City a supplemental tax raises the total rate in steps up to 3.9% for homes of $25 million or more. The buyer pays it at closing, and the rate applies to the whole price, not just the amount over $1 million.

The law calls it the “additional tax” (Tax Law §1402-a) and the NYC “supplemental tax” (§1402-b). Both are state taxes, paid with the New York State transfer tax return. To estimate your own number, use the mansion tax calculator.

What property it covers

The mansion tax applies to residential real property: premises that are, or may be, used in whole or in part as a personal residence. Tax Law §1402-a and the TP-584-NYC instructions list:

• a one-, two- or three-family house;
• an individual residential condominium unit;
• a residential cooperative apartment.

A co-op purchase is a transfer of shares, but it is still covered. The supplemental tax only applies to residential property in New York City; the 1% base applies statewide.

NYC mansion tax brackets

Since July 1, 2019, NYC purchases at $2 million and above pay the 1% base plus the supplemental tax. The rate is set by the total price, then applied to the entire amount:

Outside New York City, only the 1% base applies, at every price from $1 million up.

Worked examples

• $999,999: below the threshold. No mansion tax.
• $1,000,000: 1% of the whole price = $10,000.
• $2,000,000: 1% + 0.25% = 1.25% of $2,000,000 = $25,000.
• $5,000,000: 1% + 1.25% = 2.25% of $5,000,000 = $112,500.

The $1 million cliff

Because the rate applies to the whole price, crossing a threshold by $1 can cost thousands. Going from $999,999 to $1,000,000 adds $1 to the price and $10,000 in tax. The same cliff happens at every bracket:

So check the thresholds when you negotiate. If a seller is asking $1,000,000, an accepted offer of $999,000 saves you $1,000 on the price and $10,000 in tax. A bid just over a threshold is only worth it if the home is worth the price plus the tax jump.

How the price is counted

The tax is on consideration: the price actually paid or required to be paid. The TP-584-NYC instructions and the DTF transfer tax page say:

• The threshold uses the entire conveyance. If you buy a two-family house with a store for $1.5 million and the residential unit is worth $500,000, the conveyance is over $1 million, so the 1% applies, but only to the $500,000 residential portion.
• Existing loans. Consideration is defined broadly and includes any mortgage or lien on the property, though the transfer tax law excludes some liens that stay on a house, condo or co-op after the sale. If you are taking over the seller’s loan, ask your attorney how the price will be reported.
• Separate units are judged separately when they aren’t used together. DTF’s example: a buyer of three condo units at $750,000, $900,000 and $1.25 million pays mansion tax only on the $1.25 million unit.
• Personal property. The statute taxes the consideration “attributable to the residential real property.” Furniture and other items that aren’t real property aren’t real property by definition, but any allocation has to reflect real value and DTF can question it. Ask your attorney before splitting the price in the contract.

When and how it’s paid

The mansion tax is reported on Form TP-584-NYC (Schedule B, Parts 2 and 3) along with the seller’s transfer taxes, and paid at closing. In practice your attorney or the title company collects it from you at closing. It is a closing cost, so count it in the cash you need to close, not in your down payment.

If you’re buying at or near $1 million, add the mansion tax to the NYC closing cost calculator estimate and read every NYC buyer closing cost explained. The seller’s side is covered in NYC and NYS transfer taxes.