Mansion Tax NYC — 2026 Complete Guide (1% to 3.9% by Price Tier)
Whether you're searching for "NYC mansion tax" or "mansion tax NYC" — same thing. The official name is the New York State Real Estate Transfer Tax (RETT), but buyers and brokers universally call it the mansion tax.
What Is the Mansion Tax NYC?
The mansion tax is a New York State transfer tax that applies to residential property purchases of $1 million or more. Despite the name, it has nothing to do with mansions — a one-bedroom condo in Midtown can trigger it. The tax is calculated on the entire purchase price, not just the amount above $1 million, and it's paid by the buyer at closing.
The tax was originally introduced in 1989 as a flat 1% surcharge on sales over $1 million. In 2019, New York significantly expanded it into a progressive, tiered system for properties at $2 million and above, with rates climbing all the way to 3.9% on purchases of $25 million or more.
2025–2026 Mansion Tax Rates by Price Tier
| Purchase Price | Mansion Tax Rate |
|---|---|
| $1,000,000 – $1,999,999 | 1.00% |
| $2,000,000 – $2,999,999 | 1.25% |
| $3,000,000 – $4,999,999 | 1.50% |
| $5,000,000 – $9,999,999 | 2.25% |
| $10,000,000 – $14,999,999 | 3.25% |
| $15,000,000 – $19,999,999 | 3.50% |
| $20,000,000 – $24,999,999 | 3.75% |
| $25,000,000 and above | 3.90% |
Important
The tax applies to the full purchase price, not just the portion above each threshold. A $2 million purchase is taxed at 1.25% on the entire $2 million — not 1% on the first million and 1.25% on the second. That makes the jump from $1,999,999 to $2,000,000 particularly expensive in effective terms.
What This Means in Real Dollars
To put these rates in context:
Mansion Tax by Price Point
A $1.5 million apartment carries a mansion tax of $15,000.
Move up to a $5 million condo and the tax is $112,500.
A $10 million townhouse means $325,000 in mansion tax alone.
At the ultra-luxury end, a $25 million penthouse triggers $975,000 — nearly a million dollars before you've paid a single month of maintenance.
These are not small numbers. At the higher tiers, the mansion tax can rival or exceed a full year of common charges.
Who Pays the Mansion Tax?
The buyer pays the mansion tax in almost all NYC transactions. This is true for condos, co-ops, townhouses, and single-family homes. The tax is paid at closing and is typically non-negotiable — it's a state-imposed transfer tax, not a fee that can be shifted between parties in the contract.
That said, in a soft market, some buyers have successfully negotiated purchase price reductions or seller concessions to offset the tax. This is more common at higher price points where the mansion tax adds six or even seven figures to closing costs.
Condos vs. Co-ops
The mansion tax applies to both condos and co-ops, but the mechanics differ slightly.
For condos, the tax is straightforward — it's calculated on the purchase price of the unit and paid at closing through the title company.
For co-ops, the buyer is technically purchasing shares in a corporation rather than real property. The mansion tax still applies, but the calculation is based on the total consideration paid, including any assumed portion of the co-op's underlying mortgage. This means the effective taxable amount can be higher than the contract price if the building carries significant debt.
Co-op Buyers
Buyers should confirm the full taxable basis with their attorney before closing. The underlying mortgage allocation can add tens of thousands of dollars to the mansion tax calculation on high-value co-op units.
The Mansion Tax vs. the Transfer Tax
The mansion tax is separate from New York's standard real estate transfer taxes, which are paid by the seller. Those include:
- New York State transfer tax: 0.4% on sales up to $3 million (residential), 0.65% above $3 million
- New York City transfer tax: 1% on sales up to $500,000, 1.425% above $500,000
The mansion tax is an additional buyer-side tax on top of these. In a high-value transaction, the combined transfer taxes and mansion tax can exceed 5% of the purchase price — a meaningful drag on returns for investors and a significant cost for primary residents.
NY State vs. NYC: One Tax, One Statute
A common source of confusion: the "NYC mansion tax" is the same statute as the "NY state mansion tax." There is only one mansion tax, imposed at the state level, that applies to all residential property sales of $1 million or more anywhere in New York State.
The practical concentration of mansion tax revenue is overwhelmingly in NYC because that's where most $1M+ residential transactions occur. But a $2 million sale in Westchester, the Hudson Valley, the Hamptons, or Long Island faces the same state-level mansion tax as a $2 million sale in Manhattan — same rates, same tier table, same buyer-pays rule, paid to the same New York State Department of Taxation and Finance.
What is different in NYC: the additional NYC real property transfer tax (RPTT) imposed by the city on the seller is layered on top of the state's transfer taxes (also seller-paid) and the state's mansion tax (buyer-paid). Outside NYC, the local RPTT doesn't apply — only the state-level transfer tax + state-level mansion tax. This is why a $5 million Manhattan deal has more total closing-side tax cost than a $5 million sale in Greenwich CT or in Bedford NY, even though the buyer-side mansion tax is identical.
Search Terms Pointing Here
If you searched for "NY mansion tax," "NYS mansion tax," "mansion tax New York state," or "mansion tax NY," they all refer to this same state-level tax. The buyer-pays rule, the tier table above, and the $1 million threshold apply to every residential sale in New York State at or above that price.
New for 2026: The Proposed Second-Home Surcharge
On April 15, 2026, Governor Kathy Hochul announced a proposal to impose an additional annual tax surcharge on second homes in New York City valued at $5 million or more. This would be a yearly recurring tax — not a one-time closing cost like the mansion tax — targeting properties that are not used as primary residences or rented out.
NYC Mayor Zohran Mamdani expressed support for the measure, framing it as part of a broader effort to tax the ultrawealthy. The proposal is modeled on Rhode Island's 2025 legislation targeting high-value non-owner-occupied properties.
Key Details
The tax would apply only to homes, condominiums, and co-ops worth $5 million or more that are held for seasonal, recreational, or occasional use — not permanently occupied or rented. According to the NYC Housing and Vacancy Survey, approximately 59,000 of the city's 3.7 million housing units fall into this category, and only a fraction of those would exceed the $5 million threshold.
The estimated revenue is $500 million annually. Specific rates have not been announced. The proposal is expected to face significant political and legal challenges before becoming law.
For luxury buyers, this adds a new layer of cost analysis: the mansion tax at closing plus a potential recurring surcharge for holding the property as a second home. The combined effect could meaningfully change the math on pied-à-terre purchases in Manhattan.
How Buyers Minimize the Mansion Tax
There is no legal way to avoid the mansion tax entirely on a qualifying purchase. However, buyers and their advisors commonly consider several strategies.
Pricing just below thresholds is the most straightforward approach. A property listed at $2.05 million that closes at $1.99 million saves the buyer from jumping to the 1.25% tier — a difference of $5,000 in tax on a $50,000 price reduction. At higher tiers, the savings from pricing just under a threshold are even more significant.
Some buyers negotiate seller concessions or credits at closing that effectively offset the tax, though the mansion tax itself is still calculated on the contract price.
For investment properties, structuring the purchase through an LLC or other entity does not avoid the mansion tax — New York applies the tax to transfers of controlling interests in entities that own residential property.
The Reality
The mansion tax is a known cost of buying in New York City. At the lower tiers, it's manageable. At the upper tiers, it's a material factor in the investment calculation — and one more reason that buyers at the $10 million+ level are increasingly comparing New York to tax-friendlier markets like Miami, Dubai, and the Hamptons.
What This Means for the Market
The mansion tax creates natural price clustering just below each threshold — particularly at $999,999, $1,999,999, and $4,999,999. Sellers who list above these numbers need to offer enough value to justify the buyer's jump in closing costs.
For the luxury market specifically, the mansion tax — combined with New York's high income taxes, property taxes, and now the proposed second-home surcharge — is contributing to a shift in how ultra-high-net-worth buyers think about NYC real estate. Some are buying less, holding shorter, or looking at alternative markets entirely.
At Luxury Price Drops, we track every price reduction across luxury markets including New York City. Buyers looking for opportunities where the math works — even after the mansion tax — can monitor real-time price movements and identify properties where reductions have brought pricing to a level that absorbs the tax burden.
For buyers comparing the NYC mansion tax against neighboring markets, see also:
- NJ Mansion Tax 2026 — New Jersey's new seller-paid 1%–3.5% structure (in effect since July 10, 2025).
- California Mansion Tax 2026 — LA's Measure ULA (4%–5.5%) and other CA city transfer taxes.
- Mansion Tax by State 2026 — the full 50-state hub showing which states have one, which don't.
Track NYC Luxury Price Drops
Tracking price drops on NYC luxury properties? Browse current New York listings on Luxury Price Drops.
Frequently Asked Questions
What is the mansion tax in NYC?
The NYC mansion tax is a New York State transfer tax paid by the buyer on residential property purchases of $1 million or more. The rate starts at 1% and increases progressively with the purchase price, reaching 3.9% on sales of $25 million and above. It applies to the full purchase price — not just the amount above $1 million — and covers condos, co-ops, townhouses, and single-family homes throughout New York City.
How much is the mansion tax on a $5 million property?
The mansion tax on a $5 million property in New York City is $112,500 (2.25% of the full purchase price). This is a one-time cost paid by the buyer at closing, separate from the seller-paid transfer taxes and other closing costs. At the $5 million level, the mansion tax alone can exceed a full year of common charges in many luxury buildings.
Do co-ops pay mansion tax?
Yes. The mansion tax applies to both condo and co-op purchases. However, for co-ops, the taxable amount includes the buyer's proportional share of the building's underlying mortgage in addition to the contract price. This means the effective mansion tax on a co-op can be higher than on an equivalently priced condo. Buyers should work with their attorney to calculate the full taxable basis before closing.
Can you avoid the mansion tax?
There is no legal way to avoid the mansion tax on a qualifying purchase. Structuring through an LLC or other entity does not work — New York applies the tax to transfers of controlling interests in entities that own residential property. However, buyers can minimize the impact by negotiating purchase prices just below tier thresholds (e.g., $1,999,999 instead of $2,000,000) or by securing seller concessions to offset the cost.
What is the new second-home surcharge proposal?
On April 15, 2026, Governor Hochul proposed an annual tax surcharge on second homes in NYC valued at $5 million or more. Unlike the mansion tax (a one-time closing cost), this would be a recurring yearly tax on properties not used as primary residences or rented out. The proposal is estimated to raise $500 million annually. Specific rates have not been announced, and the measure faces significant political and legal hurdles before it could become law.
Is the NYC mansion tax different from the NY state mansion tax?
The NYC mansion tax IS the NY state mansion tax — it's the same statute. New York imposed the original 1% flat mansion tax in 1989 as a state-level transfer tax, and expanded it into the progressive 1-3.9% tier structure in 2019. The tax applies statewide to any residential sale of $1M+ in New York, but the practical concentration is overwhelmingly in NYC because that's where most $1M+ residential transactions occur. A $2M sale in Westchester, the Hudson Valley, or Long Island faces the same state-level mansion tax as a $2M sale in Manhattan.
Who pays the mansion tax in New York State?
The buyer pays the NY state mansion tax. This is a state-level rule that applies statewide — Manhattan, Brooklyn, Queens, Westchester, Hudson Valley, Long Island, upstate, anywhere in New York. The seller separately pays the NY State and (if applicable) NYC transfer taxes, but those are distinct from the buyer-paid mansion tax. The split-side structure makes New York unusual among states with mansion taxes — New Jersey and California (LA ULA) both put the mansion tax on the seller.
Updated: June 2026