Introduction: Mansion Tax Defined

Mansion Tax is a fee imposed on domestic and international buyers of residential properties in New York State, whenever the total consideration exceeds one million dollars ($1,000,000.00). Here, the term ‘residential property’ includes single-family homes, two-family and three-family dwellings, as well as condominiums and cooperative apartments.

The Mansion Tax on 4-Family Homes

If you are considering buying a 4-family home in New York, you may be asking the crucial question: Does the Mansion Tax apply? Based on the legal advice offered by the Real Estate Board of New York (REBNY), the straightforward answer is – no. The New York State Department of Finance tags 4-family houses as commercial properties for the purpose of taxation, even though these are recognized as residential for loaning reasons.

Mansion Tax Calculation: The New York State Perspective

Across New York State, the Mansion Tax is calculated as 1% of the total consideration. However, the way this tax is figured out differs depending upon whether you are in New York City or elsewhere in the state.

Mansion Tax in New York City: A Unique Approach

In the Big Apple, unique rules apply. Certain municipalities with a population of at least one million are subjected to new revenue legislation effective from July 1, 2019. This regulation has led to an increase in Mansion Tax rates by using a gradual sliding scale based on the total consideration amount. In current terms, only New York City meets the population criteria to be subject to these unique tax rules.

New York City Mansion Tax Rates Breakdown

Here is a simplified breakdown of the Mansion Tax rates for New York City:

1.00% for purchases $1,000,000 to $1,999,999

1.25% for purchases $2,000,000 to $2,999,999

1.50% for purchases $3,000,000 to $4,999,999

2.25% for purchases $5,000,000 to $9,999,999

3.25% for purchases $10,000,000 to $14,999,999

3.50% for purchases $15,000,000 to $19,999,999

3.75% for purchases $20,000,000 to $24,999,999

3.90% for purchases $25,000,000 or greater

What is Consideration?

“Consideration”, as defined by New York State Tax Law, is the exact price paid or required to be paid for the property. This amount corresponds with the amount listed on Schedule B, Part II, Line 1 of the New York State Real Property Transfer Tax Form (the TP584). If the total consideration for the property is less than $1,000,000.00, the purchaser is not required to pay the Mansion Tax.

Final Thought

Remember that any tax liabilities come with intricate rules and regulations. If you ever have any doubts, it’s always a good idea to consult your attorney for the most accurate guidance.

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