What Is the NYC Mansion Tax, and How Much Is It Going Up for FY 2020?

New York’s so-called “mansion tax” just got a makeover. Created in 1989 by Gov. Mario Cuomo, the original mansion tax was a 1 percent tax on statewide sales of homes of $1 million or more. It’s customarily paid by the buyer within 15 days of closing. Under the tax, if a house, co-op, or condo sold for $1.25 million, the buyer would have paid a tax of $12,500.

This tax was intended to bolster the New York state budget during an economic recession, and was aimed at people who could probably afford to pay it: buyers of million-dollar homes. (There were significantly fewer of those in 1989.)

Thirty years later, the mansion tax has been revised. The New York state budget for fiscal year 2020 was just passed, and along with an update to the real estate transfer tax, it includes an increase in the mansion tax — but only for New York City, as a funding mechanism for improving the city’s subways. (Both the transfer tax and the mansion tax are one-time taxes paid at the point of sale.)

For fiscal year 2020, the statewide mansion tax will remain at 1 percent for property purchased for $1 million or more. For properties in New York City, however, the new mansion tax will rise incrementally with purchase prices of $2 million or more, capping out at a total of 3.90 percent for properties sold at $25 million or above. That figure includes the 1 percent statewide mansion tax, as do the rates below.

New York City Mansion Taxes as of FY 2020

Purchase Price	Mansion Tax
Less than $999,999	0.00%
$1,000,000 – $1,999,999	1.00%
$2,000,000 – $2,999,999	1.25%
$3,000,000 – $4,999,999	1.50%
$5,000,000 – $9,999,999	2.25%
$10,000,000 – $14,999,999	3.25%
$15,000,000 – $19,999,999	3.50%
$20,000,000 – $24,999,999	3.75%
$25,000,000 or more	3.90%

Examples of Mansion Tax Costs in NYC

• Buying a home for $999,999? You pay zero mansion tax.
• Buying a home for $1,500,000? You pay a $15,000 mansion tax.
• Buying a home for $3,500,000? You pay a $52,500 mansion tax.
• Buying a home for $7,000,000? You pay a $157,500 mansion tax.
• Buying a home for $15,000,000? You pay a $525,000 mansion tax.

The new NYC mansion tax rates take effect on July 1, 2019. They’re expected to generate $365 million per year, which will be used to fund roughly $5 billion in bonds to help improve the city’s aging subway system.

And while the mansion tax is called a “tax,” it is not deductible.

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