Buyers and sellers of high-end real estate in New York City will pay higher taxes on transactions starting July 1, 2019
For sellers of NYC property: on top of an existing real estate transfer tax of 0.4%, sellers will have to pay an additional 0.25% on sales of residences of $3MM or more. For non-residential sales, that tax kicks in at $2MM.1
Buyers already were footing a 1.0% “mansion tax” when they purchased residential property in NYC for $1MM or more.2 Soon, they will pay an additional “mansion tax.”
This supplemental tax steadily escalates along with the price they pay—from 0.25% for homes purchased for $2MM to $3MM until it maxes out at 2.9% for homes purchased for more than $25MM.
That means a $25MM home sale will cost buyers a total of 3.9% in mansion taxes. On a $5MM home, the mansion tax previously would have been $50,000 (1%), but will be $112,500 (2.25%). The mansion tax does not apply to non-residential property.
These real estate tax increases are effective for transactions that take place on or after July 1, 2019. There’s an exception for contracts that were entered into on, or before April 1.3
These taxes—due on the entire purchase or sale price—apply only in New York City. That’s because the legislation impacts only cities in New York State with populations of one million or more. Currently, only NYC fits this definition.
1 Residential real property is defined to include any premises that are or may be used in whole or in part as a personal residence, and includes one-, two-, and three-family houses, individual residential condominium units, and cooperative apartment units.
2 If the seller does not pay the transfer tax or the buyer does not pay the mansion tax, the other party may be held jointly and severally liable for the respective tax.
3 This exception requires independent evidence to confirm the date of execution. For instance, by the recording of the contract, payment of a deposit, or other facts and circumstances as determined by the Commissioner of Taxation and Finance.
4 $2 per $500 (0.4%)
5 $2 per $500 (0.4%) + $1.25 per $500 (0.25%) = 0.65%