NYC Affordability

What it actually is

The “mansion tax” is a buyer-paid tax on residential real estate sales of $1,000,000 or more in New York City (and any other NY city over 1 million people, which in practice means NYC only). The name is misleading — it applies to a $1,000,000 studio the same way it applies to a $1,000,000 townhouse. It covers co-ops, condos, and 1-3 family homes — and applies identically to co-ops and condos, unlike most of the other costs that differ between them (see our co-op vs condo cost guide for where those differences actually show up).

Technically it’s two stacked state taxes: a flat 1% “additional tax” under Tax Law Section 1402-a that applies statewide starting at $1,000,000, plus a NYC-only “supplemental tax” under Section 1402-b that layers on top starting at $2,000,000. In practice, buyers and brokers just talk about the combined rate — the table below — as “the mansion tax,” and that’s the number that shows up on your closing statement.

The buyer pays it, due at closing alongside the transfer tax return. If the buyer doesn’t pay and isn’t exempt, the seller becomes liable. It’s separate from — and stacks on top of — the NYC and NYS transfer taxes the seller typically pays, so on a high-end deal, transfer-related taxes alone can run 5%+ of price between both sides of the table.

The current tier table

Purchase price	Mansion tax rate
Under $1,000,000	0%
$1,000,000 to $1,999,999	1.00%
$2,000,000 to $2,999,999	1.25%
$3,000,000 to $4,999,999	1.50%
$5,000,000 to $9,999,999	2.25%
$10,000,000 to $14,999,999	3.25%
$15,000,000 to $19,999,999	3.50%
$20,000,000 to $24,999,999	3.75%
$25,000,000 and up	3.90%

These rates took effect July 1, 2019 and haven’t changed since. The $1,000,000 floor itself dates back to 1989 and has never been adjusted for inflation.

Why it’s a cliff, not a slope

This is the part that catches buyers off guard: the mansion tax applies its bracket rate to the entire purchase price, not just the portion above the threshold. It doesn’t work like income tax, where only the dollars inside a bracket get the higher rate. Cross a line by $1, and the whole transaction reprices at the new rate.

That makes the boundaries themselves expensive. At $999,999, the tax is $0. At $1,000,000 — one dollar more — the tax is $10,000. The same jump happens at every tier line: going from $2,999,999 to $3,000,000 costs roughly $7,500 more in tax for $1 more in price, because the entire $3,000,000 gets taxed at 1.50% instead of just the sliver above $2,999,999.

This is also why round-number list prices cluster just under bracket lines — $999,000, $2,995,000, $4,995,000 — and why some contracts carve out furniture, fixtures, or other personal property into a separate bill of sale, reducing the consideration attributed to the real property itself. That’s a legitimate, documented practice, not a loophole; it only works if the personal property has genuine fair value and its own bill of sale.

Worked example

Take a condo priced at exactly $2,000,000. It falls in the $2,000,000 to $2,999,999 bracket, so:

Mansion tax = $2,000,000 x 1.25% = $25,000

Now drop the price by a single dollar, to $1,999,999. That falls back into the $1,000,000 to $1,999,999 bracket:

Mansion tax = $1,999,999 x 1.00% = $19,999.99 (roughly $20,000)

One dollar of purchase price — $2,000,000 versus $1,999,999 — is the difference between owing $25,000 and owing $20,000: a $5,000 swing in tax over $1 of price. That $5,000 has nothing to do with the property. It’s entirely the effect of which side of the line the contract price lands on.

The same math scales up. A $9,999,999 purchase owes 2.25% — $224,999.98, call it $225,000. Add $1 to hit $10,000,000 and the rate jumps to 3.25%, so the tax becomes $325,000. That’s an extra $100,000 in mansion tax for a single dollar of price, which is why contracts near the $10 million line get negotiated with real care.

The mansion tax is a closing cost, not an income requirement, but it does eat into the cash side of a purchase — see our income-needed-to-buy guide for how the cash and income constraints interact on a real purchase.