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Real Estate Transfer Tax and Mansion Tax Rates

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As part of the New York State 2020 Budget, the New York State Senate and Assembly enacted legislation that increases (a) the real estate transfer tax rate on most conveyances of real estate in New York City, and (b) the so-called “mansion” tax rate on certain conveyances of residential real estate in New York City1.

These tax rate increases apply to real estate transfers which occur on or after July 1, 2019. However, real estate transfers that occur pursuant to contracts entered into on or before April 1, 2019 are exempt, even if the transfer is not consummated until on or after July 1, 2019, so long as the contract’s execution date is confirmed by independent evidence (e.g., recording of a memorandum of contract or payment of the contract deposit).

Real Estate Transfer Tax

New York State imposes a real estate transfer tax, for which the seller (or “grantor”) is generally responsible, on conveyances of real property in the State, subject to certain limitations and exemptions. The current transfer tax rate is 0.4% (or $2 per $500 or part thereof) of the total consideration paid for the conveyance.

The new legislation increases this tax by 0.25% (from 0.4% to 0.65% of the consideration) on (1) conveyances of residential real property2 in New York City, where the consideration is $3 million or more, and (2) conveyances of any other real property (e.g., multi-family or commercial) in New York City, where the consideration is $2 million or more.

Mansion Tax

In addition to the real estate transfer tax, New York State imposes a tax (commonly known as the “mansion tax”), for which the buyer (or “grantee”) is generally responsible, on conveyances of residential real property2 in the State where the consideration is at least $1 million. The current mansion tax is 1.0% of the consideration paid for the conveyance (so long as the consideration is at least $1 million).

The new legislation increases this tax on a sliding scale for transfers where the consideration is at least $2 million, up to the highest tax rate of 3.9% on transfers with consideration of $25 million or more. The following chart shows the applicable rates for the mansion tax under this new legislation.

Consideration Amount

New Mansion Tax Rate

Under $1 million

Not subject to tax

At least $1 million, but less than $2 million

1%

At least $2 million, but less than $3 million

1.25%

At least $3 million, but less than $5 million

1.5%

At least $5 million, but less than $10 million

2.25%

At least $10 million, but less than $15 million

3.25%

At least $15 million, but less than $20 million

3.5%

At least $20 million, but less than $25 million

3.75%

$25 million or more

3.9%

Other Legislative Change

Under the new legislation, both the mansion tax and the new supplemental transfer tax are the joint and several liability of the seller (grantor) and the buyer (grantee).

It should be noted that the New York State real estate transfer tax and mansion tax are in addition to any other local transfer taxes that may apply. In particular, New York City imposes a separate real property transfer tax (2.625% for commercial property; and 1% [where the consideration is below $500,000] or 1.425% [where the consideration is $500,000 or above] for residential property).

For more information or if you have any questions regarding the topic discussed above, please contact Eric Schoenfeld at schoefeld@thsh.com or 212.508.6713, Robert Helpern athelpern@thsh.com or 212.508.6720, or any other member of the Tannenbaum Helpern Real Estate Practice.

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1 The legislation provides that the tax rate increases apply to all cities in New York State with a population of one million or more. Currently, New York City is the only city that meets this population requirement.

2 For purposes of both the real estate transfer tax and the mansion tax, residential real property includes any premises that is or may be used in whole or in part as a personal residence, and includes a one, two and three-family house, an individual condominium unit and a cooperative apartment unit.



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