All New Yorkers crave a better subway system but few thought it would affect the cost of buying a new home. Welcome to NYC’s mansion tax. The original mansion tax was created in 1989 by Gov. Mario Cuomo. It was a 1 percent statewide tax on homes sold for $1 million or more. Thus, if a property sold for $1.5 million, the buyers would have been taxed 15,000. In 2019 a new mansion tax was calculated, specifically for homes in New York City with the extra revenue tied into improving NYC’s subway system.
The cost of Mansion Tax on properties priced between $1 million and $2 million
On July 1st 2019 the progressive mansion tax for all residential properties (single family, co-ops, condos and townhouses) priced $1 million and over in NYC went into effect. Homes priced between $1 million and under $2 million were still be subject to a 1 percent mansion tax. Increasing rates were then pegged to properties’ sale prices above $2 million. The same will be true for the fiscal year of 2020.
Properties over $2 million
For a property that sells between $2 million and under $3 million the buyer must pay a 1.25 percent mansion tax. Between $3 million and less than $5 million the mansion tax is $1.5 percent and from $5 million to less than $10 million, the tax is $2.25 percent and so on. At the high end, for a property that sells for $25 million or above, the buyer must pay a 3.9 percent mansion tax. When combined with a 0.25 percent transfer tax and 0.4 percent transfer tax, a total purchase tax can be calculated
Arguments For And Against Mansion Tax
It has become a political issue. The increased tax is projected to generate $365 million annually to be used to fund New York City’s subways. But skeptics claim that Mansion tax could hurt sales in New York.
(Featured image courtesy of Corcoran)