Changes to NY State Transfer Taxes for Luxury Apartments

by Robert J. Smith on April 5, 2019

The NY State Legislature’s new Budget Bill has enacted a change to the Transfer Taxes paid by both sellers and purchasers on luxury residential transactions in any city in NY State with a population of over 1 million people (surprise, that means you, New York City!). This includes coops, condominiums and private houses. These changes take effect for any transactions closing after July 1 of this year. Sellers presently pay a NY State transfer tax in the amount of 0.4%, regardless of the sale price. Under the new Budget Bill, for those transactions with a sale price in excess of $3,000,000, the NY State transfer tax payable by the seller is increased from 0.4% of the sale price to 0.65% of the sale price. So, for a $3,000,000 transaction, this means that the amount of the NY State transfer tax increases from $12,000 to $19,500.

The Mansion Tax currently paid by the purchaser on transactions with a sale price of $1,000,000 or more (yes, $1,000,000 used to buy you a mansion in New York!) is 1% of the sale price. The new Budget Bill increases the Mansion Tax for any transaction with a sale price of over $2,000,000. The amount of the Mansion Tax increases as the price increases, as follows:

Consideration $1,000,000.00 or less: Not subject to Mansion Tax
Consideration $1,000,000.00 to $1,999,999.99: 1% of sale price (same as current law)
Consideration $2,000,000.00 to $2,999,999.99: 1.25% of sale price
Consideration $3,000,000.00 to $4,999,999.99: 1.5% of sale price
Consideration $5,000,000.00 to $9,999,999.99: 2.25% of sale price
Consideration $10,000,000.00 to $14,999,999.99: 3.25% of sale price
Consideration $15,000,000.00 to $19,999,999.99: 3.5% of sale price
Consideration $20,000,000.00 to $24,999,999.99: 3.75% of sale price
Consideration $25,000,000.00 or more: 3.9% of sale price

So, for a $2,000,000 transaction, the Mansion Tax paid by the purchaser increases from $20,000 to $25,000. For a $5,000,000 transaction, the Mansion Tax paid by the purchaser increases from $50,000 to $112,500. For a $15,000,000 transaction, the Mansion Tax paid by the purchaser increases from $150,000 to $525,000.

These are significant changes affecting transactions in the luxury market. It remains to be seen whether this will have a chilling effect on these transactions in the coming months. Please feel free to contact me if you have any questions about this or any of your other real estate needs.

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