What Is the Mansion Tax in New York? Rates, Exemptions, and Filing

The mansion tax in New York is a 1% tax the buyer pays on any residential property purchased in the state for $1 million or more, applied to the full purchase price. In New York City, a separate graduated surcharge stacks on top once the price hits $2 million, bringing the combined buyer-side rate as high as 3.9% on sales of $25 million and above.¹²

The 1% Statewide Tax

The tax is formally the “additional tax” under Section 1402-a of the New York Tax Law, and it applies to every residential purchase in the state at or above $1 million.¹ It covers one-, two-, and three-family houses, individual condominium units, and cooperative apartment units.³

The 1% applies to the entire purchase price, not just the portion above $1 million. A home that sells for exactly $1 million owes $10,000. A $1.2 million sale owes $12,000. A $999,999 sale owes nothing. That cliff is sharp enough that buyers and sellers near the line sometimes negotiate a price just under $1 million to avoid the tax entirely. Publication 577 addresses how consideration is calculated, including mixed-use properties where only the residential portion counts.³

The NYC Supplemental Surcharge

In 2019, New York added a second buyer-paid tax under Section 1402-b that applies only in cities with a population of one million or more. In practice, that means New York City. It starts at $2 million and uses graduated rates based on the full purchase price:²

$2 million to under $3 million: 0.25%
$3 million to under $5 million: 0.50%
$5 million to under $10 million: 1.25%
$10 million to under $15 million: 2.25%
$15 million to under $20 million: 2.50%
$20 million to under $25 million: 2.75%
$25 million and above: 2.90%

Those percentages are the supplemental tax alone. The 1% statewide mansion tax still applies on the same purchase, so NYC buyers at these price points pay both.

What NYC Buyers Actually Owe at Each Tier

Adding the two together gives the combined buyer-side transfer tax inside New York City:

$1 million to under $2 million: 1.00%
$2 million to under $3 million: 1.25%
$3 million to under $5 million: 1.50%
$5 million to under $10 million: 2.25%
$10 million to under $15 million: 3.25%
$15 million to under $20 million: 3.50%
$20 million to under $25 million: 3.75%
$25 million and above: 3.90%

Some real numbers. A $1.5 million Manhattan condo owes $15,000. A $5 million Brooklyn townhouse owes 2.25%, or $112,500. A $25 million penthouse hits the 3.9% ceiling and owes $975,000. Anywhere else in New York State, a residential purchase at or above $1 million pays the flat 1% regardless of price. A $4 million home in Westchester or the Hamptons owes $40,000. The same $4 million price in Manhattan owes $60,000.¹

Who Pays It

The buyer pays. Section 1402-a assigns the tax to the grantee, and 1402-b follows the same structure.¹ It shows up on the buyer’s settlement statement as a closing cost and is collected at closing.

Buyers occasionally try to negotiate for the seller to cover it, but that is uncommon. One point worth knowing: if the buyer fails to pay, the seller becomes jointly liable. That shared exposure is why both sides generally make sure the tax is handled cleanly before the deed is recorded.⁴

Exemptions

The mansion tax follows the same exemptions as the base real estate transfer tax. The ones most buyers ask about:

Bona fide gifts. A conveyance without monetary consideration, not made in connection with a sale, is exempt.
Government entities. Purchases by New York State, its political subdivisions, the United States, and their agencies are exempt.
Mere changes of identity. A transfer that reorganizes ownership without a real change in beneficial interest, such as moving a property into a revocable trust you control, may qualify.

A transfer between spouses or into a family trust is not automatically exempt. The question is whether consideration changed hands. Selling your home to a family member for $1.2 million triggers the mansion tax just as a sale to a stranger would. A genuine gift with no payment does not.⁴

How It Gets Filed and Paid

The tax is reported on Form TP-584, the Combined Real Estate Transfer Tax Return, which covers the base transfer tax, the mansion tax, and the supplemental tax in one filing. Schedule B is where the additional tax on residential property is computed.⁵ NYC transactions use a companion form, TP-584-NYC, which captures the 1402-b supplemental tax.

The return is filed and the tax paid when the deed is recorded with the county clerk. The closing attorney or title company usually handles the paperwork and remits payment as part of closing. Buyers rarely need to file anything on their own, but checking the Schedule B math on the closing statement before signing is worth a few minutes.

Penalties for Late Payment

Missing the deadline is expensive. New York imposes a 10% penalty on unpaid transfer tax, plus 2% for each month of delay, with the monthly charge capped at 25%. Combined with underpayment interest at the state’s standard rate, a delay on a seven-figure purchase can run into real money.⁶ The commissioner can waive penalties for reasonable cause rather than neglect, but that waiver isn’t something to rely on.

Federal Tax Treatment

The mansion tax isn’t deductible as a standalone item on your federal return, but it does add to your cost basis in the property. If you pay $2 million for a condo and $25,000 in combined mansion and supplemental tax, your basis starts at $2,025,000. When you eventually sell, that higher basis means a smaller taxable gain.⁷ A seller who negotiates to cover the tax treats the payment as a selling expense, which similarly reduces gain.

1
New York State Senate. New York Tax Law 1402-A – Additional Tax
2
New York State Senate. New York Tax Law 1402-B – Supplemental Tax in Cities Having a Population of One Million or More
3
Tax.NY.gov. Publication 577 FAQs Regarding the Additional Tax on Transfers of Residential Real Property for $1 Million or More
4
Department of Taxation and Finance. Real Estate Transfer Tax
5
Tax.NY.gov. Form TP-584 Combined Real Estate Transfer Tax Return, Credit Line Mortgage Certificate, and Certification of Exemption from the Payment of Estimated Personal Income Tax
6
New York Codes, Rules and Regulations. New York Codes, Rules and Regulations – Real Estate Transfer Tax Penalties
7
Internal Revenue Service. Publication 523 (2025), Selling Your Home