Cummings & Lockwood

Increase in New York Real Property Transfer Taxes, Including “Progressive Mansion Tax”

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April 11, 2019

As part of the 2019/2020 New York State Budget Bill that was passed, New York included a progressive mansion tax with a top tax rate of 3.90% on properties purchased for $25 million or above.  This update to the already existing “Mansion Tax,” which imposes a 1% tax on buyers of properties that are purchased for $1,000,000 or more, will implement a graduated scale that keeps the existing 1% tax rate for properties priced $1,000,000-$1,999,999, then increases up to a tax of 3.90% for properties purchased for $25,000,000 or more.  The progressive rate structure is as follows:

   

  Purchase Price

Mansion Tax Rate

  $0 - $999,999

0

  $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 up

3.90%

 

 

In addition, the New York State Transfer Tax is set to increase from 0.4% to 0.65% for residential properties sold for more than $3,000,000 and for commercial properties sold for more than $2,000,000.  The tax on high-end properties is expected to raise $365 million that will be deposited into the MTA's Central Business District tolling capital lockbox and will be used to support up to $5 billion in financing for MTA projects.  The new rates go into effect on July 1, 2019.  However, those transactions where a contract was fully executed on or before April 1, 2019 are exempt from the increased tax, even if they close on or after July 1, 2019.