NYC Mansion Tax Explained for Manhattan Luxury Homebuyers

Buying a luxury home in Manhattan comes with one line item that surprises even seasoned buyers: New York’s mansion tax. If you are eyeing a condo, co‑op, or townhouse at or above $1 million, this tax will shape your final numbers at closing. You deserve a clear, practical explanation that turns an opaque rule into a confident plan. In this guide, you will learn what the mansion tax is, how much it costs, who pays it, how it interacts with other New York taxes, and how to plan and negotiate strategically. Let’s dive in.

What the mansion tax is

New York’s mansion tax is a one-time state transfer tax on residential purchases at or above $1,000,000. It applies to condos, single-family homes, and many co‑op share transfers when the total consideration meets the threshold. It is separate from New York City’s Real Property Transfer Tax and New York State’s basic real estate transfer tax.

Since 2019 the mansion tax uses a progressive rate schedule above $1 million. The rate is applied to the entire purchase price that falls within a bracket. It is usually paid by the buyer at closing unless the contract clearly shifts responsibility.

Current rates and brackets

Here are the commonly used brackets. The tax rate applies to the full purchase price within each range:

• $1,000,000 to $1,999,999: 1.00%
• $2,000,000 to $2,999,999: 1.25%
• $3,000,000 to $3,999,999: 1.50%
• $4,000,000 to $4,999,999: 1.75%
• $5,000,000 to $9,999,999: 2.25%
• $10,000,000 to $14,999,999: 2.50%
• $15,000,000 to $19,999,999: 3.25%
• $20,000,000 to $24,999,999: 3.50%
• $25,000,000 and above: 3.90%

Important: the percentage is charged on the entire purchase price, not only the amount above $1 million.

Who pays and when

The buyer is legally responsible for the mansion tax unless the contract assigns it differently. Your attorney, title company, or closing agent will calculate and remit the payment as part of closing. The tax is due at closing and must be properly filed to record the transfer. You will receive proof of payment within your closing documents.

How it stacks with other costs

The mansion tax is one of several taxes and fees that can apply to a Manhattan purchase. You should plan for:

• New York City Real Property Transfer Tax, which is separate from the mansion tax and typically applies to city transfers.
• New York State real estate transfer tax, a separate state charge.
• Mortgage-related costs, including mortgage recording tax and lender fees if you finance.
• Title, attorney, and customary closing expenses, plus prorations.

Because the mansion tax is charged on the full purchase price, it adds to your required cash at closing alongside these other costs. In most cases, transfer taxes paid at purchase are not deductible on federal income tax as an itemized expense. Discuss specifics with your tax advisor.

Quick calculation examples

• Example A — $1,250,000 condo

  • Rate: 1.00%
  • Mansion tax: 1.00% × $1,250,000 = $12,500

• Example B — $2,500,000 penthouse

  • Rate: 1.25%
  • Mansion tax: 1.25% × $2,500,000 = $31,250

• Example C — $12,000,000 townhouse

  • Rate: 2.50%
  • Mansion tax: 2.50% × $12,000,000 = $300,000

Remember to add city and state transfer taxes, any mortgage recording tax, and closing fees to estimate your total cash to close.

Special situations to know

Condos, houses, and co‑ops

For condos and single-family homes, application is straightforward if the purchase price meets the threshold. For co‑ops, the tax often applies when the aggregate consideration for shares reaches $1 million or more. The details can depend on how the transaction is structured, so have your attorney confirm treatment early.

Entity and related-party transfers

Purchases by or between entities and transfers among related parties can be treated differently under the law. Some transfers to certain exempt entities may not be subject to the tax. Have counsel review any nonstandard structure before you sign.

Non-resident and international buyers

The mansion tax applies regardless of your residency. Separate withholding rules may apply to non-resident sellers. International buyers should budget extra time for currency transfers and banking procedures so the funds are ready for closing.

Complex deal structures

Installment sales, 1031 exchanges, and multi-step deals can affect filings and timing. Your attorney and title team will structure the paperwork so the mansion tax and other transfer taxes are handled correctly.

Budgeting and strategy for Manhattan buyers

Plan your cash needs

Build the mansion tax into your initial budget, especially for higher brackets where the amount can be significant. If you are financing, confirm with your lender how much cash you must bring to close after taxes and fees. International buyers should factor currency timing and banking approvals.

Price and negotiate smart

Sellers and listing agents may not always highlight transfer taxes in pricing. You can negotiate credits or discuss who pays the mansion tax. In a competitive market, sellers may resist concessions. In a slower market, you may find more flexibility.

Coordinate early with your team

Your attorney, lender, and title company will require these taxes to be paid to close. Early coordination prevents last-minute delays. Ask your attorney to confirm the bracket, prepare the forms, and align the timing of all funds.

Action checklist before you bid

• Identify your bracket and estimate the mansion tax for your target price.
• Add city and state transfer taxes, mortgage recording tax if applicable, and closing fees to reach a total cash-to-close estimate.
• Decide whether to request a seller credit or shift who pays the mansion tax in your offer.
• If buying a co‑op or using an entity, have counsel confirm how the mansion tax applies to your structure.
• Plan currency transfers and banking steps well in advance if you are an international buyer.
• Engage a Manhattan-focused attorney and title company experienced with luxury transactions.

Work with a team that knows both markets

Your purchase deserves proactive planning, clear numbers, and seamless execution from contract to keys. Our team handles complex Manhattan closings every day and understands how the mansion tax, city and state transfer taxes, financing, and board approvals come together. If you are also exploring a country retreat, we guide city-to-country moves with the same white-glove approach across the Hudson Valley.

Ready to talk strategy for your specific price point and timeline? Schedule your private consultation with The Gladstone Karadus Team.

FAQs

Who pays the NYC mansion tax on a Manhattan purchase?

• The buyer is legally responsible unless the contract assigns it differently. Many deals assume the buyer pays, but parties can negotiate.

When is the mansion tax due at closing?

• It is calculated and paid at closing with your transfer forms. Proper payment is required to record the transfer and complete the closing.

Does the mansion tax apply to co‑ops in Manhattan?

• Often yes if the aggregate consideration is $1 million or more. The outcome can depend on how the transfer is structured, so ask your attorney to confirm.

Is the mansion tax deductible on my federal income taxes?

• Generally no. Transfer taxes paid at purchase are not deductible as itemized federal income tax. Ask your tax advisor about basis treatment and your specific situation.

Can I avoid the mansion tax by buying through an LLC or trust?

• Entity structures have their own rules, and authorities look at substance over form. Attempts to avoid the tax can trigger penalties. Consult a tax attorney before using any structure.