New York State’s Real Estate Transfer Tax Undergoes Big Changes

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New York State has made several large changes to real estate transfer taxes that all New York residents should understand going forward. The changes will affect individuals buying and selling real property in the New York City area specifically.

The current real estate transfer tax has includes a base tax of $2 for each $500, or fractional part thereof, of consideration. In addition, there was (and remains) an additional tax of 1% of the consideration or part thereof attributable to the residential real property. This 1% tax only applies when the entire conveyance is $1 million or more; this is commonly referred to as the “mansion tax.”

The new transfer tax provisions now include an additional base tax of $1.25 for each $500 $3.25 per $500 total(), or fractional part thereof, of consideration on each conveyance of real property or interest therein within any city in New York having a population of 1,000,000 or more (i.e., New York City). The additional base tax applies to conveyances of residential real property of $3 million or more, and conveyances of $2 million or more on any other property (e.g., commercial buildings). As with the previous base tax, liability of the new additional base tax is paid by the seller.

On top of the additional base tax, New York also added a new supplemental progressive mansion tax of 2.9%, applied when consideration exceeds $25 million. This now creates a maximum mansion tax of 3.9% (1% + 2.9%) for buyers.

 

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