Increases to New York State Transfer Tax and Mansion Tax
As part of the 2020 budget, the New York State Senate and Assembly increased New York State’s transfer tax and mansion tax on transfers of real property (including, cooperative units). The changes only affect those transfers in New York City and other cities with a population of one million or more.
The changes will apply to all transfers closing after July 1, 2019. However, there is an exception – transfers closing after July 1, 2019, but made pursuant to a contract of sale entered into on or before April 1, 2019 (as confirmed by independent evidence such as recording the contract of sale), will not be subject to the increased tax rates.
NYS Transfer Tax
Prior to the change, the New York State transfer tax rate was $2.00 for every $500.00 of consideration (0.40%), subject to limited exceptions and exemptions. The New York State transfer tax is traditionally a seller’s responsibility. The chart below shows the new transfer tax rates for those transfers in New York City and other cities with a population of one million or more:
|Consideration Amount||NYS Transfer Tax Rate Residential Property||NYS Transfer Tax Rate Commercial Property|
|Under $2 million||0.40%||0.40%|
|$2 million ‒ $3 million||0.40%||0.65%|
|Over $3 million||0.65%||0.65%|
NYS Mansion Tax
Prior to the change, the New York State mansion tax was imposed on transfers of residential real property with consideration of $1 million or more at the rate of 1.00% percent of the entire consideration. The mansion tax is a purchaser’s responsibility, however, in the event, the purchaser fails to pay the mansion tax or is otherwise exempt from paying the mansion tax, the seller would be responsible to pay the same.
The chart below shows the new mansion tax rates for those transfers in New York City and other cities with a population of one million or more:
|Consideration Amount||Total NYS Mansion Tax Rate|
|Under $1 million||Not subject to tax|
|$1 million, but less than $2 million||1.00%|
|$2 million, but less than $3 million||1.25%|
|$3 million, but less than $5 million||1.50%|
|$5 million, but less than $10 million||2.25%|
|$10 million, but less than $15 million||3.25%|
|$15 million, but less than $20 million||3.50%|
|$20 million, but less than $25 million||3.75%|
|$25 million or more||3.90%|
Please note that the New York City and other local real property transfer tax rates have not changed as a result of this legislation.
Should you have any questions about the foregoing or any other real estate matter, please feel free to contact the author of this blog.