The NYC Mansion Tax, Explained Clearly

Buying in Manhattan and heard about the “mansion tax”? You are not alone. Closing math in New York can feel opaque, especially once your purchase price crosses seven figures. In this guide, you will learn exactly what the mansion tax is, when it applies, how it fits alongside other NYC taxes and fees, and how to plan your cash to close with confidence. Let’s dive in.

What the NYC mansion tax is

The mansion tax is a New York State transfer tax that applies to residential purchases when the price is $1,000,000 or more. The baseline rule most Manhattan buyers use is simple: 1.0% of the purchase price once you hit the $1,000,000 threshold.

It applies to residential transfers, including condominiums and many co-op share transfers that meet the threshold and are reported on closing documents. Co-ops are technically a transfer of shares rather than real property, but similar treatment often applies when the price is high enough. You should confirm this for your specific deal with your closing attorney.

The tax is calculated on the full purchase price, not on the amount you finance. You typically pay it at closing as part of your cashier’s check or wire.

Who pays and when

The purchaser is generally the party liable for the mansion tax. In practice, you pay it at closing. Parties can negotiate how to allocate certain closing costs in the contract, but the statutory liability usually sits with the buyer.

Timing matters. Plan for the mansion tax as part of your cash to close and make sure funds are available in the format your closing agent requires.

How it fits with other NYC closing taxes

The mansion tax is only one line item in your closing costs. In Manhattan, you should also plan for:

• New York City Real Property Transfer Tax (RPTT): A municipal transfer tax on New York City property transfers. Rates vary by property type and price tier.
• New York State Real Estate Transfer Tax (RETT): A separate state conveyance tax, distinct from the mansion tax.
• Mortgage recording taxes: If you take a mortgage, state and NYC mortgage recording taxes apply to the loan amount (not the purchase price).
• Other closing costs: Attorney fees, title-related charges for condos and townhouses, lender fees, and potential co-op fees or flip taxes.

Because many Manhattan homes trade at $1,000,000 or more, buyers often pay the mansion tax plus NYC and state transfer taxes. Together, these can materially increase your total cash due at closing.

Simple examples at Manhattan price points

To make the mansion tax more concrete, here are quick examples using the standard 1.0% rule on purchases at or above $1,000,000.

Mansion tax only (1.0%)

• $1,000,000 purchase → $10,000 mansion tax
• $1,500,000 purchase → $15,000 mansion tax
• $2,000,000 purchase → $20,000 mansion tax
• $5,000,000 purchase → $50,000 mansion tax
• $10,000,000 purchase → $100,000 mansion tax

Combined transfer taxes illustration

Beyond the mansion tax, Manhattan buyers commonly owe NYC RPTT and NYS RETT. For scale, consumer examples often show a combined estimate of these transfer taxes. One illustrative pattern many use is approximately 2.825% of the purchase price when you add a 1.0% mansion tax to representative NYC and state transfer-tax components. This is an example only. Actual combined rates depend on current brackets and rules.

• $1,000,000 purchase → combined transfer taxes ≈ $28,250 (mansion tax portion = $10,000)
• $1,500,000 purchase → combined ≈ $42,375 (mansion tax portion = $15,000)
• $2,000,000 purchase → combined ≈ $56,500 (mansion tax portion = $20,000)
• $5,000,000 purchase → combined ≈ $141,250 (mansion tax portion = $50,000)
• $10,000,000 purchase → combined ≈ $282,500 (mansion tax portion = $100,000)

Important: These combined figures are examples to show scale. Your exact closing statement will reflect the current NYC and state transfer-tax brackets, any mortgage recording taxes, and other transaction-specific fees.

Planning your cash to close

Buyers who plan early have smoother closings. Use these steps to stay ahead:

• Confirm applicability: If your price is at or above $1,000,000, plan for a 1.0% mansion tax on the full purchase price.
• Coordinate with your lender: Lenders do not pay the mansion tax, and most will not roll transfer taxes into your loan amount. Make sure your cash-to-close plan covers these funds.
• Speak with your attorney early: Confirm how the mansion tax will be handled, how it interacts with NYC RPTT and NYS RETT, and what funds you need on closing day.
• Budget beyond the tax: Add NYC and state transfer taxes, mortgage recording taxes if you are financing, attorney fees, title or co-op charges, lender fees, and any building-specific fees.
• Mind the threshold: If your price is near $1,000,000, discuss structure and pricing with your attorney before signing a contract. Any changes must comply with law and building policies.
• Check timing and format of funds: Confirm wire or certified funds requirements so nothing delays the closing.

Co-ops and the mansion tax

Many Manhattan co-op purchases at $1,000,000 or more will trigger the mansion tax. While you are buying shares in a corporation rather than real property, many high-price share transfers are treated similarly for mansion-tax purposes when reported on the closing documents. Always confirm the building’s transfer requirements and tax treatment with your closing attorney.

Is the mansion tax negotiable?

The mansion tax is a statutory obligation. You and the seller can negotiate how closing costs are allocated in the contract, but the legal liability typically rests with the purchaser. In competitive markets, sellers are less likely to offer concessions. In slower markets, some sellers may agree to contribute toward closing costs as part of a broader negotiation.

Tax reporting and long-term planning

Transfer taxes are not generally deductible as an annual expense. They are part of your closing costs. Portions may affect your cost basis, which can matter for capital gains when you sell. Before you sign a contract for a high-value purchase, speak with your attorney and a tax advisor about how the mansion tax and other transfer taxes will be treated for your situation.

Your next steps

• Build a working estimate of your closing costs that includes the mansion tax and other transfer taxes.
• Ask your lender to confirm cash-to-close requirements and whether any taxes impact your loan terms.
• Have your attorney review mansion-tax and transfer-tax obligations before you execute the contract.
• If your price is near the threshold, discuss compliant pricing strategies with your attorney early.

If you want a clear, transaction-specific view of your numbers and strategy in downtown Manhattan, let’s talk. Connect with The Saez + Fromm Team for a private, confidential consultation tailored to your goals.

FAQs

What is the NYC mansion tax for a $1,500,000 Manhattan purchase?

• Using the standard rule, the mansion tax is 1.0% of the price, so $15,000, separate from NYC and state transfer taxes and any mortgage recording taxes.

Who pays the mansion tax at closing in New York?

• The purchaser is generally liable for the mansion tax, and buyers usually pay it at closing as part of their cash to close.

Does the mansion tax apply to Manhattan co-ops?

• Many co-op share transfers at $1,000,000 or more trigger the tax; confirm the specifics with your closing attorney and the building’s transfer requirements.

Is the mansion tax deductible on my taxes?

• Transfer taxes are typically not an annual deductible expense; they are closing costs, and portions may affect your cost basis. Consult a CPA for guidance.

Can I finance the mansion tax or will my lender pay it?

• Lenders do not pay the mansion tax. Most loans will not roll transfer taxes into the mortgage amount; plan to bring these funds to closing.

When is the mansion tax due in New York?

• It is typically due at closing and paid with your other closing funds, by wire or certified funds as directed by the closing agent.