New York City’s “Mansion Tax”
Buying a home in New York City is a big step. If your dream home costs $1 million or more, you’ll hear about the “mansion tax.” What is it, and how does it affect your purchase? Let’s break it down so you know what to expect.
WHAT IS THE MANSION TAX?
The mansion tax sounds fancy, but it applies to many homes in NYC, not just mansions. Started in 1989, this tax is added to residential properties sold for $1 million or more.
In 2019, NYC introduced a sliding scale, so the tax rate now ranges from 1% to 3.9%, depending on the home’s price. This tax applies to NYC condos, co-ops, townhouses, or single-family homes priced at $1 million or higher. Buyers usually pay it at closing, within 15 days of the sale.
Here’s the 2025 NYC tax breakdown:
$1M–$1.99M: 1%
$2M–$2.99M: 1.25%
$3M–$4.99M: 1.5%
$5M–$9.99M: 2.25%
$10M–$14.99M: 3.25%
$15M–$24.99M: 3.5%
$25M+: 3.9%
This tax is added to your closing costs, so it’s essential to plan for it.
WHY DOES IT EXIST?
In 1989, only super-luxury homes cost $1 million. Today, many homes in NYC have reached that mark because prices have soared. The tax hasn’t changed with inflation, so it affects approximately 30% of NYC home sales in 2025. The extra money from the 2019 rate increase helps fix NYC subways, but some say it’s tough on regular buyers.
In a few cases, such as selling to a nonprofit, an exemption may apply, but it’s rare. Some buyers try to lower the sale price just below $1 million or separate furniture costs, but these ideas can be tricky and must follow tax rules. To explore your options safely, contact our real estate attorneys for expert advice.
The mansion tax is a one-time cost at closing, along with fees like attorney costs. It’s not tax-deductible, but it can lower future taxes when you sell your home. Forgetting to budget for it can cause stress in NYC’s fast-moving market.
The mansion tax is just one part of buying a home in NYC. At Marano Law, we guarantee to make the transaction process smooth.
Disclaimer: This post is for informational purposes only and is not legal or tax advice. Consult our qualified attorneys or a tax professional for your specific needs.
