Understanding the New York State Mansion Tax: NYC Rates and Calculation Examples
New York State imposes a mansion tax on qualifying NYC residential purchases of $1 million or more. The rate ranges from 1% to 3.9% and applies to the entire purchase price within the applicable bracket.
The New York State mansion tax is a buyer closing cost imposed on qualifying residential property purchased for $1 million or more. Despite its name, the tax is not limited to townhouses or unusually large homes. It can apply to an individual co-op apartment, condominium, or one- to three-family house based on the consideration paid for the property.
The statewide mansion tax generally begins at 1% of the consideration. For qualifying residential purchases in New York City, an additional supplemental tax applies at $2 million and above, causing the combined mansion-tax rate to increase across several price brackets.
The applicable percentage is imposed on the entire purchase price—not only the portion above the threshold.
1. Which Properties Are Subject to the Mansion Tax?
New York State defines residential real property for mansion-tax purposes to include a one- to three-family house, an individual residential condominium unit, or a cooperative apartment. The tax therefore applies to both real-property purchases and individual co-op transactions.
Properties outside these common categories can require a more transaction-specific analysis. This can include larger residential buildings, mixed-use properties, and purchases involving multiple units.
The tax is triggered when the consideration for a qualifying residential conveyance reaches $1 million. Consideration generally begins with the purchase price but can include other value transferred as part of a more complex transaction.
2. NYC Mansion Tax Brackets
New York City's mansion-tax structure has two layers. Qualifying residential purchases of $1 million or more are subject to the 1% New York State mansion tax. Once an NYC purchase reaches $2 million, an additional NYC supplemental mansion tax applies. The supplemental percentage increases at several purchase-price thresholds.
The combined rates can be understood as follows (New York State + NYC supplemental):
$1 million to less than $2 million: 1.00% State (no supplemental) = 1.00% total
$2 million to less than $3 million: 1.00% State + 0.25% supplemental = 1.25% total
$3 million to less than $5 million: 1.00% State + 0.50% supplemental = 1.50% total
$5 million to less than $10 million: 1.00% State + 1.25% supplemental = 2.25% total
$10 million to less than $15 million: 1.00% State + 2.25% supplemental = 3.25% total
$15 million to less than $20 million: 1.00% State + 2.50% supplemental = 3.50% total
$20 million to less than $25 million: 1.00% State + 2.75% supplemental = 3.75% total
$25 million or more: 1.00% State + 2.90% supplemental = 3.90% total
For example, a $3 million NYC residential purchase is subject to the original 1% statewide mansion tax plus a 0.50% supplemental tax, producing a combined mansion-tax rate of 1.50%.
The supplemental tax is established under New York State Tax Law Section 1402-b and applies specifically to qualifying residential conveyances in cities with populations of one million or more—currently New York City.
3. The Rate Applies to the Entire Purchase Price
The mansion-tax brackets do not operate like marginal income-tax brackets. When a purchase reaches a new threshold, the corresponding rate applies to the entire consideration—not only the portion above the threshold.
Consider two purchases immediately on either side of the $2 million threshold:
Purchase at $1,999,999
$1,999,999 × 1.00% = $19,999.99
Purchase at $2 million
$2,000,000 × 1.25% = $25,000
A one-dollar increase in consideration causes the mansion tax to rise by approximately $5,000 because the transaction enters a higher bracket and the new rate applies to the full purchase price. This threshold effect can become relevant when a negotiated price is near a bracket boundary.
Example 1: A $1.2 Million Co-op Purchase
Consider an individual co-op apartment purchased for $1.2 million. The purchase falls between $1 million and $2 million, so the applicable mansion tax rate is 1%.
$1,200,000 × 1.00% = $12,000
The calculation is based on the consideration, regardless of whether the buyer pays cash or finances the purchase. A mortgage changes other closing costs and financial requirements, but it does not reduce the mansion-tax base.
Example 2: A $2.5 Million Condo Purchase
A condominium purchased for $2.5 million falls within the $2 million to less than $3 million bracket. The applicable mansion tax rate is 1.25%.
$2,500,000 × 1.25% = $31,250
For NYC purchases of $2 million or more, the applicable rate combines the original 1% statewide mansion tax with the supplemental NYC tax. In this example, the 1.25% total can be understood as:
Original statewide mansion tax (1.00%): $25,000
Supplemental NYC tax (0.25%): $6,250
Total mansion tax (1.25%): $31,250
The same structure applies as the purchase price enters the higher NYC brackets: the supplemental rate increases, producing the higher total mansion-tax rate applicable to the entire consideration.
4. Mansion Tax at Common NYC Purchase Prices
The following examples show the mansion tax due at several NYC purchase prices. For purchases of $2 million or more, the listed rate includes both the 1% statewide mansion tax and the applicable NYC supplemental tax (from section 2).
Price: $999,999 | Rate: None | Tax Due: $0
Price: $1,000,000 | Rate: 1.00% | Tax Due: $10,000
Price: $1,500,000 | Rate: 1.00% | Tax Due: $15,000
Price: $2,000,000 | Rate: 1.25% | Tax Due: $25,000
Price: $2,500,000 | Rate: 1.25% | Tax Due: $31,250
Price: $3,000,000 | Rate: 1.50% | Tax Due: $45,000
Price: $5,000,000 | Rate: 2.25% | Tax Due: $112,500
These calculations assume that the stated purchase price is the full taxable consideration and that the entire property qualifies as residential real property.
5. Who Pays the Mansion Tax?
The mansion tax is ordinarily paid by the grantee, or buyer. It is due at the same time and in the same manner as the New York State real estate transfer tax.
If the buyer fails to pay or is exempt from the tax, the seller can become responsible. In that circumstance, liability may extend to both parties. The buyer remains the participant assigned primary responsibility under New York State Tax Law Sections 1402-a and 1402-b.
This differs from the standard NYC and NYS real estate transfer taxes, which are ordinarily seller obligations unless the contract provides otherwise or the seller fails to pay.
The mansion tax is generally collected as part of the closing process and appears among the buyer’s cash requirements. It is payable whether the purchase is financed or all cash.
6. Financing Does Not Change the Calculation
Unlike the mortgage recording tax, the mansion tax is not based on the buyer’s loan amount. Consider two buyers purchasing comparable $1.5 million condominiums:
Buyer A obtains a $1.2 million mortgage.
Buyer B obtains a $750,000 mortgage.
Both purchases carry the same $15,000 mansion tax: $1,500,000 x 1.00% = $15,000
The buyers may have different mortgage recording taxes, lender costs, and cash requirements, but their mansion-tax calculations are the same because the purchase prices are the same.
7. Multiple Units and Combined Transactions
The treatment of multiple co-op or condo units can depend on how they are transferred and used.
Separate units are not necessarily combined automatically for mansion-tax purposes merely because the same buyer acquires them. However, units used together, physically combined, or treated as a single residence may be analyzed differently from independently transferred apartments.
For example, two individually transferred units priced below $1 million do not necessarily create mansion-tax liability solely because their combined prices exceed $1 million. The transaction documents, use of the units, and relationship between the transfers can affect the result.
This is an area where the formal transaction structure matters more than a simple addition of the listing prices.
8. How the Mansion Tax Fits Into Buyer Closing Costs
The mansion tax is separate from:
NYC and NYS seller transfer taxes
Mortgage recording tax
Lender fees
Title insurance
Attorney fees
Building application and move-related charges
Prepaid property taxes, common charges, or maintenance
For a buyer purchasing new-development or sponsor property, the contract may also assign certain seller transfer taxes or other sponsor expenses to the buyer. Those amounts are added to the mansion tax rather than replacing it.
A $2.5 million sponsor purchase, for example, could include a $31,250 mansion tax together with contractually assigned NYC and NYS transfer taxes. The complete buyer closing-cost estimate therefore depends on both the statutory tax structure and the purchase contract.
9 The Role of a Buyer’s Agent
A buyer’s agent can identify the applicable mansion-tax bracket, incorporate the estimated tax into the buyer’s anticipated closing costs, and show how a proposed purchase price near a threshold affects the calculation.
The agent can also identify listing or offering terms that shift seller expenses to the purchaser. The transaction’s attorney determines the final taxable consideration, reviews the contractual allocation of closing costs, and prepares or reviews the required transfer-tax documents.
Related Resources & Insights
If you’re considering purchasing a co-op, condo, townhouse, or one- to three-family home in New York City, feel free to reach out to discuss anticipated closing costs and how the purchase price may affect the applicable mansion tax.