The NYC Mansion Tax, a tax on the purchase of real estate above $1 million, will rise for the first time in 30 years. The tax is customarily paid by the buyer in the transaction, while the seller is on the hook for state and local transfer taxes (which also increased this year). The new tax increase on home purchases went into effect on July 1st, a few months after Albany passed new legislation earlier this year.
Under the previous law, there was a 1% flat-rate tax on all purchases above $1 million. Under the new law, homes sold between $1-2 million will still be taxed at 1%. The new NYC Mansion Tax has an increasing scale for homes sold above $2 million. Homes sold between $5-10 million will now come with a tax of 2.50%, while homes sold above $20 million will be taxed at 4%.
State lawmakers claim the tax increase on home purchases will help pay for the city's out-dated subway system. Home prices on the higher end of the market in NYC could be affected by the new increase in taxes on home purchases. Only time will tell how this affects the real estate market in NYC.
Check out the chart from Bloomberg.com below which details the new NYC Mansion Tax.