Eyeing a condo or co-op in Midtown East and wondering why everyone keeps talking about the mansion tax? You are not alone. When your purchase price reaches seven figures, that one-time state tax becomes a meaningful part of your budget. In this guide, you will learn exactly what triggers the tax, how to estimate it for common Midtown East price points, and smart steps to plan with your lender and attorney. Let’s dive in.
Mansion tax basics in Midtown East
The New York State mansion tax is a one-time state transfer tax on residential real estate purchases with a contract price of 1,000,000 dollars or more. It applies to condominiums, co-ops, single-family homes, and other residential transfers when the price meets the threshold. The tax is typically paid by you, the buyer, at closing unless the contract states otherwise.
Payment happens at closing as part of your settlement. You should confirm with your lender whether any portion can be financed or if it must be paid in cash at the table. The tax amount is tied directly to your purchase price, so you will want a precise calculation before you sign a contract.
Current rates and how to calculate
New York State uses a graduated rate schedule for residential purchases. The applicable rate is based on the full contract price and is applied to the entire amount.
- 1.00% for 1,000,000 to 1,999,999 dollars
- 1.25% for 2,000,000 to 2,999,999 dollars
- 1.50% for 3,000,000 to 4,999,999 dollars
- 2.25% for 5,000,000 to 9,999,999 dollars
- 3.25% for 10,000,000 to 14,999,999 dollars
- 3.50% for 15,000,000 to 19,999,999 dollars
- 3.75% for 20,000,000 to 24,999,999 dollars
- 3.90% for 25,000,000 dollars and above
Important: The tax is not marginal. The single rate for your price bracket applies to the full purchase price.
Examples you can use
- 1,000,000 dollar purchase at 1.00%: 10,000 dollars
- 1,500,000 dollar purchase at 1.00%: 15,000 dollars
- 2,250,000 dollar purchase at 1.25%: 28,125 dollars
- 3,500,000 dollar purchase at 1.50%: 52,500 dollars
- 6,000,000 dollar purchase at 2.25%: 135,000 dollars
- 12,000,000 dollar purchase at 3.25%: 390,000 dollars
Always confirm the current schedule with your attorney before you finalize a contract, since laws can change.
How it shapes your Midtown East budget
The mansion tax can materially increase your cash to close. Even at the 1.00% bracket, you could add five figures to your closing funds. At higher price points, the tax quickly becomes a six-figure line item.
Because the tax is bracket-based, small changes that cross a threshold can have an outsized impact. For example, moving from 1,999,999 dollars to 2,000,000 dollars shifts your rate from 1.00% to 1.25% on the entire price. You should review any price adjustments with your attorney and lender before you sign.
Condo vs co-op details
The mansion tax applies to both condo and co-op purchases when the price meets or exceeds 1,000,000 dollars. For co-ops, the tax is calculated on the stated sale price of the shares tied to the apartment.
Closing cost profiles can differ by property type. Condo buyers typically pay for title-related items. Co-op buyers do not buy title insurance in the same way, but many cooperatives have their own fees. Some buildings impose a flip tax on resales. These are separate from the state mansion tax and should be reviewed in your co-op’s proprietary documents.
Other NYC closing costs to expect
You should plan for city-level taxes and standard closing items in addition to the mansion tax:
- NYC real property transfer tax, which is separate from the state mansion tax
- Mortgage recording tax, if you are financing
- Recording fees and building-specific charges
- Attorney fees, lender fees, and appraisal fees
- Condo title insurance or co-op closing fees
- Co-op or condo application, move-in, or reserve requirements
- Possible building flip tax if applicable
Your lender may or may not allow any portion of transfer taxes to be rolled into the loan. That decision affects loan-to-value and debt-to-income ratios. Confirm these details early so you know your exact cash-to-close number.
Practical ways to plan and negotiate
- Calculate early. As soon as you agree on a price near or above 1,000,000 dollars, have your attorney compute the mansion tax so you can budget accurately.
- Talk to your lender. Ask if any part of transfer taxes can be financed and how that affects underwriting and reserves.
- Negotiate in the contract. While the buyer is generally responsible by statute, some buyers negotiate seller concessions or credits to offset closing costs.
- Be careful around thresholds. Small price changes that push you into a higher bracket can produce a bigger bill. Any structuring must be lawful and transparent, so follow your attorney’s guidance.
- Coordinate building details. Review the condo or co-op’s rules for flip taxes, application fees, and how the closing statement will show the mansion tax.
- Prepare your cash. Include the mansion tax in your cash-to-close summary so there are no surprises on closing day.
- Check special situations. Purchases through entities, trusts, or by foreign persons can raise additional legal or tax considerations. Get professional advice.
Midtown East buyer checklist
- Confirm the final mansion tax rate for your contract price.
- Get a written cash-to-close estimate that includes the mansion tax, NYC transfer taxes, mortgage recording tax, attorney fees, and any building flip taxes.
- Ask your lender if any part of transfer taxes can be financed, and document the impact on your loan terms.
- Align the contract on who pays which taxes and fees.
- Review co-op or condo documents for building-imposed fees or approvals that affect timing and cost.
Sample scenarios by price
Here is a quick refresher using the current schedule:
- If you purchase at 1,500,000 dollars, the tax is 1.00 percent, which equals 15,000 dollars.
- If you purchase at 2,250,000 dollars, the tax is 1.25 percent, which equals 28,125 dollars.
- If you purchase at 3,500,000 dollars, the tax is 1.50 percent, which equals 52,500 dollars.
- If you purchase at 6,000,000 dollars, the tax is 2.25 percent, which equals 135,000 dollars.
- If you purchase at 12,000,000 dollars, the tax is 3.25 percent, which equals 390,000 dollars.
Ready to run the numbers?
If you want a clear, step-by-step plan for your Midtown East purchase, we are here to help you coordinate the right attorney and lender, model cash to close, and negotiate smartly. Start a conversation with Justin Martinez for a personalized strategy and next steps.
FAQs
Does New York’s mansion tax apply to co-ops in Midtown East?
- Yes. It applies to sales of co-op shares when the price meets or exceeds 1,000,000 dollars.
Who is responsible for paying the mansion tax at a Midtown East closing?
- The statutory obligation is generally on the buyer, although payment can be negotiated in the contract.
Can you finance the mansion tax with your mortgage in New York City?
- Usually not by default. Some lenders may permit limited financing, so confirm with your lender early in the process.
Does New York City have its own mansion tax separate from the state?
- No. The city has its own real property transfer tax and a mortgage recording tax, which are separate from the state mansion tax.
How do personal property items, like furniture, affect the mansion tax?
- The tax is based on the contract price for the residential transfer. If significant personal property is included, ask your attorney how any allocation might affect taxes.
