NYC Mansion Tax Brackets Explained (Updated for 2025): What Every Buyer & Seller Should Know
NYC Mansion Tax Brackets Explained (Updated for 2025): What Every Buyer & Seller Should Know
Buying or selling real estate in New York City involves a complex set of closing costs, and for many transactions, one of the most significant is the Mansion Tax. While its name may suggest a tax on sprawling estates, this progressive tax can apply to a wide range of residential properties, including condos, co-ops, and townhouses, priced at $1 million or more. Understanding how this tax is calculated is crucial for both buyers budgeting for a purchase and sellers aiming to price their property competitively.
This article provides a comprehensive, up-to-date guide to the NYC Mansion Tax for 2025, drawing on insights from industry experts and official government sources.
What is the NYC Mansion Tax?
The NYC Mansion Tax is a New York State real estate transfer tax that is paid by the buyer at closing. It is a one-time charge based on the purchase price of residential property in New York City that sells for $1 million or more.
Contrary to its name, the tax is not a flat fee but a progressive tax with a tiered rate structure. This means the percentage you pay increases as the purchase price climbs into higher brackets.
How is the Mansion Tax Calculated?
The tax is calculated as a percentage of the total purchase price, not just the amount over the $1 million threshold. This is a key point that can significantly impact a buyer's closing costs. For example, a property selling for $1,000,001 is subject to the same 1% tax on the full amount as a property selling for $1,999,999.
Here's a breakdown of the current NYC Mansion Tax brackets and rates for 2025:
Purchase Price Range | Tax Rate |
$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 and up | 3.90% |
Mansion Tax Calculation Examples
Let's look at some real-world scenarios to illustrate how the tax is calculated and what you can expect to pay.
Example 1: Buying a Co-op
Purchase Price: $1,500,000
Tax Bracket: The purchase falls into the $1M - $1,999,999 bracket.
Tax Rate: 1.00%
Mansion Tax Due: $1,500,000 x 1.00% = $15,000
Example 2: Buying a Family Townhouse
Purchase Price: $4,500,000
Tax Bracket: The purchase falls into the $3M - $4,999,999 bracket.
Tax Rate: 1.50%
Mansion Tax Due: $4,500,000 x 1.50% = $67,500
Example 3: Buying a Luxury Penthouse
Purchase Price: $12,500,000
Tax Bracket: The purchase falls into the $10M - $14,999,999 bracket.
Tax Rate: 3.25%
Mansion Tax Due: $12,500,000 x 3.25% = $406,250
As these examples show, the tax can add a substantial amount to a buyer's total closing costs, which can range from 2% to 6% of the purchase price, depending on the property type and whether it's a new development or a resale.
Key Questions & Answers
Who pays the NYC Mansion Tax?
The buyer is responsible for paying the Mansion Tax at the time of closing. If, for any reason, the buyer fails to pay, the liability falls to the seller.
What is the difference between the Mansion Tax and other transfer taxes?
The NYC Mansion Tax is a separate tax from the New York State Transfer Tax and the NYC Real Property Transfer Tax (RPTT). While the Mansion Tax is typically paid by the buyer, the other two transfer taxes are generally paid by the seller.
Here's a quick comparison:
NYS Transfer Tax: A statewide tax on real estate conveyances, typically paid by the seller.
NYC RPTT: A tax on real property transfers within New York City, also generally paid by the seller.
NYC Mansion Tax: An additional state tax on residential properties over $1M, paid by the buyer.
Can I deduct the Mansion Tax?
No, the NYC Mansion Tax is not deductible from your federal income taxes. However, it can be included as part of your property's "cost basis." When you eventually sell the property, increasing your cost basis can reduce your taxable capital gains.
Does the tax apply to co-ops and condos?
Yes, the Mansion Tax applies to residential real property, which includes co-ops, condos, and single-family to three-family homes. The specific tax rates apply regardless of the property type.
A Brief History of the NYC Mansion Tax
The Mansion Tax was first enacted in 1989 as a flat 1% tax on residential real estate transactions of $1 million or more. The $1 million threshold, which was considered "mansion" territory at the time, has not been adjusted for inflation since its inception.
In 2019, as part of the state budget, a progressive tax schedule was introduced for purchases of $2 million and above. This new structure added a series of higher-rate brackets, which are the same rates in effect for 2025. While there have been discussions and proposals to adjust the $1 million threshold to account for inflation, no such changes have been enacted as of early 2025.
Tips & Takeaways for Buyers and Sellers
For Buyers: Always factor the Mansion Tax into your total budget. An all-cash buyer of a $1.5 million co-op, for example, will need to bring an extra $15,000 to the closing table. Be prepared for a significant closing cost, especially in a competitive market.
For Sellers: The Mansion Tax can affect your pricing strategy. When a property is priced just above a tax bracket threshold (e.g., $2.01M vs. $1.99M), it can sometimes be a deal-breaker for buyers who want to avoid the higher tax rate.
The "$1 Gap": The difference between buying a property for $999,999 and $1,000,000 is not a mere dollar—it is a $10,000 tax bill. Be strategic about your offers and negotiations if you are near a tax bracket boundary.
The NYC real estate market can be challenging to navigate, with various taxes and fees that can complicate a transaction. Having a knowledgeable partner by your side is essential.
Ready to find your next home or sell your current property? Contact Yeo Real Estate today for expert guidance on every step of your real estate journey.