Buying a home on Long Island for $1,000,000 or more triggers the New York mansion tax on Long Island, a flat 1% of the full purchase price paid by the buyer at closing. On a $1.2 million house in Nassau or Suffolk County, that’s $12,000 owed to the state before any other closing cost. The 1% applies to the entire price, not just the amount over a million, and unlike New York City there is no progressive surcharge layered on top.
The Million-Dollar Cliff
New York Tax Law Section 1402-a imposes the mansion tax on every conveyance of residential property where the total consideration is $1,000,000 or more.1New York State Senate. New York Tax Law 1402-A – Additional Tax A $1,000,000 purchase and a $5,000,000 purchase are both taxed at the same flat percentage.
That produces a sharp cliff. A home selling for $999,999 owes zero mansion tax. A home selling for $1,000,000 owes $10,000. One dollar of extra sale price produces a five-figure tax bill, which is why negotiations around the threshold sometimes get creative. Buyers and sellers occasionally target $999,999 to duck the tax, but the state calculates consideration broadly and looks at the full economic picture of the deal.
What Counts as Consideration
The tax is not calculated on just the cash you bring to closing. Consideration includes every form of value exchanged for the property: cash, assumed mortgages, discharged liens, and any other assets conveyed as part of the deal.2Cornell Law Institute. N.Y. Comp. Codes R. and Regs. Tit. 20 575.3 – Additional Tax
This matters most for co-op buyers. When you purchase a cooperative apartment, the underlying mortgage held by the co-op corporation counts toward the consideration, and you cannot deduct that mortgage or any lien on the co-op shares when checking whether the deal has crossed the $1,000,000 line.2Cornell Law Institute. N.Y. Comp. Codes R. and Regs. Tit. 20 575.3 – Additional Tax Pay $600,000 out of pocket for a unit that carries a $400,000 share of the building’s mortgage, and you are at $1,000,000 total. The mansion tax then applies to the full amount.
Which Properties the Tax Covers
The mansion tax reaches residential property that is or could be used as a personal residence, in three specific categories:1New York State Senate. New York Tax Law 1402-A – Additional Tax
- One-, two-, or three-family houses, the most common type across Nassau and Suffolk.
- Individual condominium units, each assessed independently regardless of the building’s total value.
- Cooperative apartment units, treated as residential real property even though the transaction technically transfers shares in a corporation.
Larger residential buildings sit outside the tax. A ten-unit apartment building, even one worth well over $1,000,000, is not a one-to-three-family house, condo unit, or co-op unit, so the mansion tax does not reach it.2Cornell Law Institute. N.Y. Comp. Codes R. and Regs. Tit. 20 575.3 – Additional Tax Purely commercial properties and vacant land not used as a residence are also excluded.
Who Pays
The buyer pays. Section 1402-a places the mansion tax obligation on the grantee, which is the opposite of the standard New York transfer tax where the seller is responsible.1New York State Senate. New York Tax Law 1402-A – Additional Tax Buyers sometimes negotiate a closing credit from the seller to offset the cost, and in a soft market some sellers agree, but the state holds the buyer accountable.
If the buyer is a tax-exempt entity, such as a qualifying nonprofit, the obligation shifts to the seller. The same shift happens if the buyer simply fails to pay when required.1New York State Senate. New York Tax Law 1402-A – Additional Tax The county clerk will not record the deed until the tax is paid, so the transfer cannot close without someone writing the check.
Long Island Rates Compared to New York City
Long Island buyers sometimes see alarming mansion tax figures that only apply inside New York City. Tax Law Section 1402-b imposes a supplemental progressive mansion tax on residential property in cities with a population of one million or more, which in practice means only New York City.3New York State Senate. New York Tax Law 1402-B – Supplemental Tax in Cities Having a Population of One Million or More Those rates run from 0.25% on sales of $2 million to $3 million up to 2.9% on sales of $25 million or more, layered on top of the base 1%.
None of that applies in Nassau or Suffolk. A Long Island buyer paying $3,000,000 for a waterfront home owes 1% ($30,000) in mansion tax. The same purchase in Brooklyn would owe an additional 0.5% supplemental tax ($15,000) on top of the base 1%, for a combined mansion tax burden of $45,000.3New York State Senate. New York Tax Law 1402-B – Supplemental Tax in Cities Having a Population of One Million or More The gap widens further at higher price points.
Other Transfer Taxes Stacked on Top
The mansion tax sits alongside the standard New York real estate transfer tax under Tax Law Section 1402, which runs at $2 per $500 of consideration, or 0.4%.4New York State Senate. New York Tax Law 1402 – Imposition of Tax The seller typically pays that base tax by custom and contract. On a $1,200,000 Long Island home, the seller pays $4,800 in standard transfer tax and the buyer pays $12,000 in mansion tax, totaling $16,800 to the state on the transaction.
East End buyers face more. The five Peconic Bay towns of East Hampton, Riverhead, Shelter Island, Southampton, and Southold impose an additional 2% Community Preservation Fund transfer tax.5Town of Southampton, NY. Fund Overview Southampton adds another 0.5% Community Housing Fund tax, bringing its total to 2.5%. A $2,000,000 purchase in Southampton can trigger the 1% mansion tax ($20,000), the 0.4% standard transfer tax ($8,000), and the 2.5% Peconic tax ($50,000), stacking to $78,000 in combined transfer taxes. Some of these towns offer exemptions for first-time buyers who meet income and price limits, so ask your attorney before closing.
Federal Tax Treatment
The mansion tax is not deductible on your federal return. The IRS classifies transfer taxes as nondeductible, so you cannot claim it on Schedule A even if you itemize.6Internal Revenue Service. Deductible Taxes
It does become part of your home’s cost basis. The IRS treats transfer taxes paid by the buyer as a settlement cost added to basis.7Internal Revenue Service. Publication 551 – Basis of Assets A higher basis produces a smaller taxable gain when you sell. Pay $12,000 in mansion tax on a $1,200,000 purchase, and your starting basis is $1,212,000 plus other qualifying settlement costs, reducing the capital gain later on.8Internal Revenue Service. Publication 523 – Selling Your Home
Exemptions
Outright exemptions are narrow. As of May 9, 2025, conveyances of real property to a tax-exempt nonprofit operated for conservation, environmental, parks, or historic preservation purposes are exempt from the mansion tax.9Department of Taxation and Finance. Real Estate Transfer Tax That covers land trust acquisitions and similar preservation transactions, not typical residential sales.
Deals below $1,000,000 are not subject to the tax, but remember that the state looks at total economic value, not just the stated price. Side agreements, assumed mortgages, and discharged liens can push consideration past the threshold even when the contract price appears to sit below it.
Filing and Paying at Closing
The mansion tax is reported on Form TP-584, the Combined Real Estate Transfer Tax Return. The mansion tax calculation goes in Schedule B, Part 2. Part 1 handles the standard 0.4% transfer tax; Part 2 handles the additional 1% for transactions at or above $1,000,000.10Department of Taxation and Finance. Instructions for Form TP-584
The completed form and full payment go to the Nassau County Clerk or Suffolk County Clerk at the time the deed is recorded. Clerks typically require certified checks or attorney trust account checks. If payment is short or missing, the clerk rejects the deed for recording, leaving the buyer without legal proof of ownership until the problem is fixed. In practice, your closing attorney handles the filing and payment out of the funds you bring to the table.
Penalties If Something Goes Wrong
Because the tax is due at recording, late filing usually means the deed never got recorded and the buyer has a bigger problem than penalties. If additional tax comes due later after an audit or correction, New York layers penalties quickly:11Department of Taxation and Finance. Interest and Penalties
- Late filing runs 5% of the tax due per month or partial month, up to 25%. Returns more than 60 days late face a minimum penalty of $100 or the total tax owed, whichever is less.
- Late payment adds 0.5% of the unpaid amount per month, up to 25%, on top of interest that compounds daily.
- Underreporting the tax by more than 10% or $2,000, whichever is greater, adds a 10% penalty on the underpayment.
Interest runs from the original due date regardless of intent, and the rate adjusts quarterly. The penalties fall on you as the taxpayer even when your attorney prepared the return, so review the numbers on Form TP-584 before closing and keep a copy of the filed return with your records.