What Is the NYC Mansion Tax and Who Actually Pays It?
If you're buying a home in New York City for $1 million or more, you'll owe the mansion tax — even if your "mansion" is a one-bedroom co-op. Despite the name, this tax hits a huge share of ordinary NYC transactions, because the $1 million threshold was set back in 1989 and has never been adjusted for inflation.
The basics
The mansion tax is a New York State transfer tax (Tax Law § 1402-a and § 1402-b) that applies to residential real property purchases of $1,000,000 or more. Key facts:
The buyer pays it, at closing. (The seller pays the separate NYC and NYS transfer taxes.)
It is a one-time cost — not an annual tax. Your yearly bill is property tax, which is a different thing entirely.
It applies to condos, co-ops, townhouses, and 1–3 family homes anywhere in the five boroughs.
It is calculated on the entire purchase price, not just the amount above $1 million. Buy at exactly $1,000,000 and you owe $10,000. Buy at $999,999 and you owe $0.
The rates in 2026
Since the 2019 state budget reform, the mansion tax has been progressive, with 8 brackets ranging from 1% (purchases of $1M to under $2M) up to 3.9% (purchases of $25M+). Within New York City, the higher tiers apply; in the rest of New York State, the tax remains a flat 1% above $1 million.
Important 2026 update: earlier this year, the State Senate and Assembly proposed a major restructuring — lower thresholds, higher rates, and shifting primary liability to sellers. That proposal did not pass. The current rates remain exactly as they've been since 2019. Separately, the Governor has floated a recurring surcharge on high-value second homes; that has also not been enacted. Always confirm current law with your attorney before closing, because proposals resurface every budget season.
Who technically owes it
Under the statute, the buyer (grantee) is the primary obligor. If the buyer fails to pay or is exempt, liability can shift to the seller — which is why the tax appears in every purchase contract discussion. In new developments, sponsors sometimes negotiate for buyers to also cover the seller-side transfer taxes; note that when a buyer absorbs seller taxes, the taxable consideration is "grossed up," slightly increasing the total bill.
Can you deduct it?
Generally, no. The mansion tax is not deductible against federal income tax in the year paid. Instead, it is typically added to your cost basis, which reduces your capital gain when you eventually sell. Confirm treatment with your CPA.
Planning takeaways
Know your bracket before you offer — a small price difference near a threshold can change your tax by tens of thousands of dollars.
Budget it into your liquidity plan. Co-op boards look at post-closing liquidity, and the mansion tax comes out of your cash at closing.
Never try to avoid the tax by splitting a sale into pieces or understating price — the state treats related transfers as one transaction, and penalties apply.
Run your own numbers with a mansion tax calculator (Hauseit publishes a good interactive one), then verify the full closing cost picture with your real estate attorney.
This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Tax rates and laws change; figures reflect New York law as of August 2026. Consult a licensed attorney and CPA regarding your specific transaction. Sources: NY Tax Law § 1402-a/1402-b; NYS Department of Taxation and Finance; NYC Department of Finance.
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