Buying in Manhattan and eyeing a seven‑figure price? One closing cost can catch even seasoned buyers by surprise: New York’s “mansion tax.” You want clarity before you sign, and you deserve simple numbers you can plan around. In this guide, you will learn what the tax is, how it’s calculated, who typically pays it, and how to budget alongside other Manhattan closing costs—so you can make confident decisions. Let’s dive in.
What the NYC mansion tax is
The mansion tax is a New York State transfer tax applied to residential purchases at or above a statutory price threshold. In practical terms, if your Manhattan purchase meets or exceeds that threshold, the state assesses a percentage of the total consideration at closing. This tax is separate from New York City transfer taxes and the mortgage recording tax.
The tax is reported and paid through state transfer tax filings as part of your closing package. Your attorney or closing agent will prepare the state transfer tax return, such as the TP-584 form, and remit the tax when your deed or transfer is recorded with the City Register.
How calculation works
The tax is based on the total consideration for the transfer. “Consideration” typically includes the purchase price and any other value exchanged in the deal. If you assume a seller’s mortgage or take on other indebtedness as part of the transaction, that assumed debt is generally counted in the total.
A simple planning rule many buyers use is the 1 percent headline rate for properties at or above the million‑dollar threshold. Under that assumption:
- $1,000,000 purchase → $10,000 mansion tax
- $1,500,000 purchase → $15,000 mansion tax
- $2,500,000 purchase → $25,000 mansion tax
- $5,000,000 purchase → $50,000 mansion tax
These examples use a flat 1 percent for easy budgeting. For ultra‑high‑price transactions, confirm with your attorney whether any tiered or supplemental rates apply under current New York State guidance.
When it is paid and who files
The mansion tax is typically collected at closing. Your buyer’s attorney and the seller’s attorney coordinate the paperwork and payment along with the other transfer taxes. The tax is remitted to New York State when the transfer documents are recorded with the City Register.
The state transfer tax return (commonly TP-584 or the current version) is part of the closing packet your attorney prepares. Always ask for a draft closing statement that shows the mansion tax as its own line item so you can verify the amount before closing day.
Who usually pays
By custom in New York residential transactions, the buyer typically pays the mansion tax. This is a matter of practice, not a hard legal requirement, and the contract can allocate payment differently. In competitive situations or specific negotiations, the parties may agree to another arrangement, but you should plan for it as a buyer expense unless your contract states otherwise.
Condos, co‑ops, and special cases
- Co‑ops: Co‑op purchases are generally structured as share transfers, not deeds. The mansion tax can still apply if the consideration meets the threshold. In practice, the sale price for the shares plus any additional consideration is used for the calculation.
- Assumed debt: If you assume the seller’s mortgage and that assumption pushes total consideration to or above the threshold, the mansion tax amount typically reflects the full consideration, including the assumed debt.
- Assignments and new development contracts: Contract assignments or sponsor sales can trigger the tax depending on total consideration and timing. Have your attorney review the structure.
- Entity purchases: Buying through an entity does not generally avoid the tax. Any specialized approach should be vetted by counsel and tax advisors.
Budgeting for Manhattan closings
Think of the mansion tax as one line item in a broader closing budget. When a purchase is at or above $1,000,000, a simple way to plan is to earmark 1 percent of the purchase price for mansion tax, then add the other major costs below.
Common buyer-side closing costs in Manhattan include:
- Mortgage-related fees: Lender application, underwriting, appraisal, and inspection fees.
- Mortgage recording tax: New York City imposes a mortgage recording tax on financed amounts. The rate depends on loan size and structure and is often significant. Confirm the exact rate with your lender before you finalize numbers.
- NYC and NYS transfer taxes: These are separate from the mansion tax and apply to the transfer itself. They can add several thousand dollars to multiple percentage points depending on the price tier.
- Title insurance and searches: Typically required for condos and townhouses, and priced by policy schedules. Co‑ops do not have title insurance, but still involve due diligence and closing fees.
- Attorney fees: Buyer’s counsel commonly ranges from about $1,500 to $5,000 or more based on complexity.
- Building fees: Co‑op and condo transactions may involve application fees, move-in fees, common charge or maintenance prorations, and any building-specific transfer or sponsor fees.
- Escrows and reserves: You may fund tax escrows, common charge or maintenance reserves, or post-closing capital contributions depending on the building.
Quick budgeting checklist:
- Mansion tax: plan 1 percent of purchase price if you are at or above $1,000,000.
- NYC and NYS transfer taxes: confirm current brackets with your attorney.
- Mortgage recording tax: confirm with your lender.
- Attorney and closing agent fees: request written estimates.
- Title insurance and searches (if applicable): ask for a preliminary quote.
- Building fees and prorations: request the building’s fee schedule.
- Buffer: add a 1 to 2 percent contingency for surprises.
Step-by-step: what to do
Before you go to contract
- Ask whether the price includes any assumed debt, building fees, or sponsor charges.
- Run a quick 1 percent mansion tax line into your affordability if you are near or above $1,000,000.
- If you are close to the threshold, consider how a small price change affects your total cash at closing.
At contract signing
- Confirm in writing who is responsible for the mansion tax.
- If an assumption of mortgage is involved, have your attorney clarify how it impacts total consideration.
- Ask your lender for an itemized estimate of loan fees and any mortgage recording tax.
Before closing
- Request a draft closing statement showing the mansion tax, NYC and NYS transfer taxes, mortgage recording tax, and all fees.
- Confirm the state transfer tax form to be filed (for example, TP-584) and who will remit payment at recording.
- Recheck your total cash to close, including any building reserves and prorations.
Examples at Manhattan price points
Using the 1 percent planning rule for simplicity:
- $1,000,000 → $10,000
- $1,250,000 → $12,500
- $1,750,000 → $17,500
- $3,000,000 → $30,000
- $7,500,000 → $75,000
These figures are for quick planning only. Your attorney and lender will confirm the official calculation and any applicable brackets or surcharges under current New York State guidance.
Key takeaways
- The mansion tax is a New York State transfer tax due at closing when total consideration meets the threshold.
- The tax base is total consideration, which can include assumed mortgage debt.
- Buyers usually pay by custom, though contracts can allocate differently.
- Use 1 percent as a quick planning rule at or above $1,000,000, then add NYC and NYS transfer taxes, mortgage recording tax, and closing fees.
- Always confirm final numbers with your attorney and lender before closing.
Buying in Manhattan benefits from careful planning, clear math, and steady guidance. If you would like tailored advice for your purchase or a second set of eyes on your closing budget, connect with Francine Crocker for discreet, fiduciary counsel.
FAQs
What is the NYC mansion tax for Manhattan buyers?
- It is a New York State transfer tax charged on residential purchases at or above a statutory threshold, calculated on the total consideration and paid at closing.
How is the mansion tax calculated in NYC?
- It is based on total consideration, which includes the purchase price plus any assumed mortgage or other value exchanged; many buyers budget 1 percent as a quick estimate.
Who typically pays the mansion tax in Manhattan?
- By custom the buyer pays, but it can be negotiated in the contract; plan for it unless your agreement clearly allocates it to the seller.
When is the mansion tax collected during a NYC closing?
- Your attorney coordinates payment at closing and remits it with the state transfer tax forms when the deed or transfer is recorded.
Does the mansion tax apply to NYC co‑ops?
- Yes, co‑op share transfers can be subject to the tax if the total consideration meets the threshold, using the sale price plus any additional consideration.
Can I avoid the mansion tax by using an LLC or special structure?
- Buying through an entity does not generally avoid the tax; any specialized strategy should be reviewed with counsel and tax advisors due to scrutiny and limits on exemptions.
Should I worry about the mansion tax if my offer is just under $1,000,000?
- Yes, a small increase above the threshold adds a meaningful tax; discuss pricing and allocation strategies with your agent and attorney before signing.
