NYC mansion tax is a progressive transfer tax that ranges from 1% to 3.9% of the purchase price for residential properties sold at $1 million or more. This buyer closing cost affects thousands of luxury property transactions annually across Manhattan, Brooklyn, Queens, Staten Island, and the Bronx.
Understanding the mansion tax structure helps buyers budget accurately for their NYC real estate purchase and explore legitimate strategies to minimize this significant expense.
NYC Mansion Tax Rates 2025: Current Brackets & Calculations
The NYC mansion tax applies 8 specific rate brackets starting at $1 million and escalating to $25 million or more. The 2025 NYC Mansion Tax is a buyer closing cost of 1% to 3.9% of the purchase price, for NYC residential purchases of $1 million or more.
Current Rate Table:
| Purchase Price Range | Tax Rate | Tax on $1M | Tax on Range Maximum |
|---|---|---|---|
| $1,000,000 – $1,999,999 | 1.00% | $10,000 | $19,990 |
| $2,000,000 – $2,999,999 | 1.25% | N/A | $37,488 |
| $3,000,000 – $4,999,999 | 1.50% | N/A | $74,985 |
| $5,000,000 – $9,999,999 | 2.25% | N/A | $224,978 |
| $10,000,000 – $14,999,999 | 3.25% | N/A | $487,468 |
| $15,000,000 – $19,999,999 | 3.50% | N/A | $699,965 |
| $20,000,000 – $24,999,999 | 3.75% | N/A | $937,463 |
| $25,000,000 and above | 3.90% | N/A | $975,000+ |
Real-World Calculation Examples:
- $1.5 million condo: $15,000 mansion tax (1%)
- $2.5 million townhouse: $31,250 mansion tax (1.25%)
- $5.2 million penthouse: $117,000 mansion tax (2.25%)
- $12 million estate: $390,000 mansion tax (3.25%)
Because the mansion tax is paid on the entire value of the property, the difference between buying an apartment for $999,999 and $1 million isn’t one dollar, it’s $10,001.
5 Types of NYC Properties Subject to Mansion Tax
NYC mansion tax applies to 5 distinct residential property types when the purchase price exceeds $1 million. Unlike the mortgage recording tax, which can be avoided by buying a co-op, there’s no way around the mansion tax. It applies on new development, resale properties, condos, co-ops and houses.
Covered Property Types:
- Individual condominium units – All NYC condos regardless of building size or age
- Cooperative apartment units – Co-op shares in buildings of any size
- Single-family houses – Detached homes and attached townhouses
- Two-family houses – Duplexes and legal two-family dwellings
- Three-family houses – Triplexes and legal three-family properties
Important Exemption:
Buildings with 4 or more residential units are generally treated as commercial property and exempt from mansion tax when sold as complete buildings. However, individual units within these buildings remain subject to mansion tax when sold separately.
Neighborhood Analysis: Manhattan vs Brooklyn vs Queens Mansion Tax Impact
Manhattan leads NYC boroughs in mansion tax frequency, with over 70% of residential sales triggering the tax. The neighborhood-specific impact varies dramatically based on median property values and local market conditions.
Manhattan High-Impact Neighborhoods:
Tribeca: Median sale price $3.2 million – 1.50% average mansion tax
- Typical mansion tax: $48,000 per transaction
- Explore luxury Manhattan properties
SoHo: Median sale price $2.8 million – 1.25% average mansion tax
- Typical mansion tax: $35,000 per transaction
Upper East Side: Median sale price $1.8 million – 1.00% average mansion tax
- Typical mansion tax: $18,000 per transaction
Brooklyn Moderate-Impact Areas:
Park Slope: Median sale price $1.4 million – 1.00% mansion tax
- Growing luxury market with increasing mansion tax exposure
DUMBO: Median sale price $1.6 million – 1.00% mansion tax
- Waterfront condos frequently trigger mansion tax
Learn more about Brooklyn’s evolving real estate market and mansion tax trends affecting different neighborhoods.
Queens Emerging Markets:
Long Island City: Median sale price $950,000 – Limited mansion tax exposure
- Most properties remain below $1 million threshold
Astoria: Median sale price $850,000 – Minimal mansion tax impact
- Occasional luxury developments trigger the tax
Staten Island Value Markets:
Most Staten Island neighborhoods maintain median prices below $1 million, resulting in limited mansion tax exposure. However, premium areas like Todt Hill occasionally see mansion tax applications on luxury estates.
7 Legitimate Strategies to Reduce NYC Mansion Tax Burden
NYC buyers can employ 7 proven strategies to minimize mansion tax exposure while remaining fully compliant with tax law.
Strategy 1: Negotiate Purchase Price Below Thresholds
Reduce the purchase price to fall below $1 million or move to a lower tax bracket. For example, negotiating a price from $5.1 million down to $4.999 million would drop you from the 2.25% tax bracket into the 1.50% bracket, saving you a substantial amount on your tax bill.
Strategy 2: Utilize Commission Rebates
Commission rebates from your buyer’s agent can effectively lower the purchase price for tax purposes. Since a commission rebate lowers your cost basis, it can make that $1,010,000 purchase price $989,800 (2% lower) in eyes of the Internal Revenue Service (IRS).
Strategy 3: Separate Personal Property from Real Estate
Negotiate to purchase furniture, appliances, or artwork separately from the real estate transaction. This legitimate strategy reduces the taxable real estate value while keeping total consideration reasonable.
Strategy 4: Consider Multi-Unit Buildings
Purchase entire buildings with 4 or more units to qualify for commercial property treatment. A building with four or more residential units, however, is generally treated as a commercial property for tax purposes and is exempt from the mansion tax.
Strategy 5: Explore Gift Ownership Structures
Gift partial ownership to family members before purchase to reduce individual taxable amounts. Professional legal guidance ensures compliance with gift tax regulations.
Strategy 6: Time Purchase Around Market Conditions
Monitor seasonal market patterns and negotiate during buyer-favorable periods when sellers may accept lower prices to close transactions.
Strategy 7: Partner with Experienced Professionals
Work with seasoned NYC real estate professionals who understand mansion tax implications and can structure transactions to minimize tax exposure legally.
For personalized mansion tax planning, contact our experienced NYC real estate team with over 37 years of local market expertise.
First-Time Luxury Home Buyers: NYC Mansion Tax Planning Guide
First-time luxury buyers must budget for mansion tax as a significant component of NYC closing costs, typically representing 15-25% of total buyer expenses.
Essential Planning Steps:
Prepare for total closing costs of 3-5% of purchase price when mansion tax applies. Closing costs in NYC can be 5-6% of the purchase price. This includes the mansion tax, transfer taxes, attorney fees, mortgage fees, and title insurance.
Research neighborhood price patterns to understand where mansion tax thresholds create market distortions. Properties priced just below $1 million often represent better value than those slightly above.
Consult with tax professionals early to understand the mansion tax’s impact on your overall tax planning, including cost basis implications for future sales.
Factor seasonal market timing into your purchase strategy, as luxury market activity varies throughout the year, affecting negotiating power.
Financing Considerations:
Include mansion tax in loan pre-approval calculations to ensure adequate liquidity at closing. Many first-time luxury buyers underestimate this additional cash requirement.
Explore bridge financing options if mansion tax significantly impacts available down payment funds.
Review our comprehensive mansion tax calculator to estimate exact costs for your target purchase price.
Investment Properties: Mansion Tax Considerations for NYC Investors
Real estate investors face identical mansion tax rates regardless of whether properties serve as primary residences or rental investments. However, investment strategy implications differ significantly from owner-occupied purchases.
Investment-Specific Tax Implications:
Cost basis benefits amplify for rental properties because the mansion tax increases the depreciable basis for rental income tax calculations.
Cash flow impact varies by investment strategy – fix-and-flip investors face immediate cash outlay while buy-and-hold investors can factor costs into long-term returns.
Portfolio diversification across price points can limit mansion tax exposure while maintaining NYC market access.
Market Analysis for Investors:
Sub-$1 million properties offer mansion tax avoidance in emerging neighborhoods like certain areas of Queens and Brooklyn where appreciation potential remains strong.
Luxury rental markets justify mansion tax costs when rental premiums support higher acquisition costs in prime Manhattan locations.
Multi-unit building acquisitions provide mansion tax exemption for investors seeking larger portfolio additions through single transactions.
Historical Context: From Mario Cuomo to Today
The mansion tax originated in 1989 under Governor Mario Cuomo as a 1% flat tax targeting luxury real estate purchases to address state budget shortfalls. This tax was originally enacted in 1989 by Governor Mario Cuomo as a flat 1% tax on the purchase price of properties exceeding $1 million, specifically targeting luxury real estate sales to close budget gaps.
Key Historical Changes:
1989: Initial 1% flat rate on purchases $1 million and above 2019: Introduction of progressive rate structure up to 3.9% 2025: Rates remain unchanged despite inflation impact
Inflation Impact Analysis:
Adjusted for inflation, 2025’s mansion tax wouldn’t kick in until $2,600,000 but unfortunately, the floor has never been raised. This means the tax now affects middle-class buyers of modest apartments rather than only luxury mansion purchasers as originally intended.
Recent Legislative Developments:
May 2025: On or after May 9, 2025, conveyances of real property for open space, parks, or historic preservation purposes to any not-for-profit tax exempt corporation operated for conservation, environmental, parks, or historic preservation purposes are exempt from the additional tax (mansion tax).
NYC Transfer Taxes vs Mansion Tax: Understanding the Difference
NYC mansion tax operates independently from other real estate transfer taxes, creating multiple layers of transaction costs for buyers and sellers.
NYC Real Property Transfer Tax (RPTT):
- Seller responsibility: 1.425% for properties $500,000 and above
- Applied to: All property types including commercial
- Based on: Full purchase price
New York State Transfer Tax:
- Seller responsibility: 0.4% under $3 million, 0.65% over $3 million
- Applied to: All real estate transactions
- Based on: Purchase price
NYC Mansion Tax:
- Buyer responsibility: 1% to 3.9% based on purchase price
- Applied to: Residential properties $1 million and above
- Based on: Total consideration including personal property
It should be noted that the New York State real estate transfer tax and mansion tax are in addition to any other local transfer taxes that may apply.
Closing Process and Payment Requirements
Mansion tax payment occurs at closing through your attorney or title company as part of standard settlement procedures. This tax must be paid at closing unless the seller agrees to cover it.
Required Documentation:
Form TP-584-NYC: Combined Real Estate Transfer Tax Return filed with payment Proof of payment: Receipt required for deed recording Legal compliance: Attorney review ensures proper calculation and filing
Timeline Requirements:
Payment due: At closing with other settlement costs Filing deadline: Within 15 days of transfer completion Processing time: Immediate for closing completion
Joint Liability Provisions:
Where the buyer has the duty to pay the transfer tax because the seller has failed to pay, the tax becomes the joint and several liability of the seller and the buyer; provided that in the event of such failure, the buyer shall have a cause of action against the seller for recovery of payment of such tax by the buyer.
Tax Deductibility and Cost Basis Implications
NYC mansion tax is not federally tax deductible but increases your property’s cost basis for capital gains calculations. The mansion tax does not directly affect your tax return but it is added to your cost basis.
Federal Tax Treatment:
Not deductible: The federal tax code explicitly specifies which taxes are deductible for federal tax purposes – these include state income and property taxes (up to the $10,000 SALT cap) – so there’s no opportunity to get creative here. The mansion tax is not on the list and is not deductible.
Cost basis increase: Mansion tax payments increase your property’s tax basis, potentially reducing future capital gains tax liability.
Example Calculation:
Purchase price: $1,250,000
Mansion tax: $12,500 (1%)
New cost basis: $1,262,500
When selling the property, this higher cost basis reduces taxable capital gains, providing long-term tax benefit offsetting the initial mansion tax payment.
Frequently Asked Questions
Q: How much is the mansion tax in Manhattan for a $1.5 million condo?
A: The mansion tax for a $1.5 million condo in Manhattan is exactly $15,000, calculated at 1% of the purchase price. This applies to all NYC boroughs equally.
Q: Does the mansion tax apply to co-ops in Brooklyn?
A: Yes, the mansion tax applies to co-ops in Brooklyn when the purchase price exceeds $1 million. The tax rates are identical across all NYC boroughs.
Q: What neighborhoods in NYC have the highest mansion tax burden?
A: Manhattan neighborhoods like Tribeca, SoHo, and Upper East Side have the highest mansion tax burden due to median property prices exceeding $2 million, triggering higher tax brackets.
Q: Can first-time buyers avoid the mansion tax in Queens?
A: First-time buyers in Queens cannot avoid the mansion tax if their property costs $1 million or more. However, they can use strategies like commission rebates to reduce the purchase price below $1 million.
Q: How does the mansion tax affect closing costs in Staten Island?
A: In Staten Island, the mansion tax typically adds 1% to closing costs for properties over $1 million. Combined with other transfer taxes, total closing costs range from 1.5% to 2.5% of the purchase price.
Q: When do I pay the mansion tax in NYC?
A: The mansion tax is paid at closing as part of your settlement costs, typically handled by your attorney or title company.
Q: Is the NYC mansion tax tax deductible?
A: The mansion tax is not federally tax deductible but increases your property’s cost basis, potentially reducing capital gains taxes when you sell.
Q: What happens if I can’t pay the mansion tax?
A: If you cannot pay the mansion tax, the closing cannot proceed, and the seller becomes jointly liable for payment under New York law. affect closing costs in Staten Island?
A: In Staten Island, the mansion tax typically adds 1% to closing costs for properties over $1 million. Combined with other transfer taxes, total closing costs range from 1.5% to 2.5% of the purchase price.
Q: When do I pay the mansion tax in NYC?
A: The mansion tax is paid at closing as part of your settlement costs, typically handled by your attorney or title company.
Q: Is the NYC mansion tax tax deductible?
A: The mansion tax is not federally tax deductible but increases your property’s cost basis, potentially reducing capital gains taxes when you sell.
Q: What happens if I can’t pay the mansion tax?
A: If you cannot pay the mansion tax, the closing cannot proceed, and the seller becomes jointly liable for payment under New York law.
Professional Guidance and Resources
Expert real estate guidance becomes essential when navigating NYC’s complex mansion tax requirements and optimization strategies.
Robert DeFalco Realty’s Mansion Tax Expertise:
With over 37 years of NYC real estate experience, our team provides comprehensive mansion tax planning and transaction support across all five boroughs. Visit our offices in Manhattan, Brooklyn, Staten Island, and New Jersey for personalized consultation.
Official Resources:
- New York State Department of Taxation and Finance – Official rates and forms
- NYC Department of Finance – Additional NYC tax information
- IRS Publication 551 – Cost basis guidance
Market Research Resources:
- Federal Reserve Economic Data – Housing market trends
- Urban Institute Housing Finance Policy Center – Policy analysis
- NYU Furman Center – NYC housing data and research
2025 Market Outlook and Future Changes
NYC mansion tax rates remain stable through 2025, but proposed legislation could impact future thresholds and rate structures.
Current Stability:
As of 2024, there are no known changes to the mansion tax rates or thresholds. Although, as discussions surrounding housing affordability continue, there is potential for legislative changes that could impact the Mansion Tax and its exemptions.
Potential Future Reforms:
Threshold adjustments: Proposed inflation indexing could raise the $1 million floor Rate modifications: Progressive structure refinements under consideration
Revenue allocation: Potential earmarking for affordable housing initiatives
Market Impact Monitoring:
The mansion tax continues influencing NYC luxury market dynamics, with buyers and sellers adapting strategies around threshold pricing and seasonal transaction timing.
Ready to navigate NYC’s mansion tax requirements? Our experienced real estate professionals provide comprehensive guidance for luxury property purchases across Manhattan, Brooklyn, Queens, Staten Island, and the Bronx. Contact Robert DeFalco Realty for expert mansion tax planning and transaction support tailored to your specific needs and investment goals.
This article provides general information about NYC mansion tax requirements and should not substitute for professional legal or tax advice. Consult qualified professionals for guidance specific to your situation.