The NYC Mansion Tax, Explained (And How to Avoid the Next Bracket)
Last updated: May 2026
You found the apartment. You did the math on the down payment, the mortgage, the closing costs. And then your attorney says two words that make your stomach drop: mansion tax.
Here's the thing nobody warns first-time buyers about: cross the $1 million mark in New York City and you owe a one-time tax that starts at $10,000 and climbs from there. And "mansion" is generous marketing. In this market, $1 million buys a perfectly normal two-bedroom in plenty of Brooklyn neighborhoods. No ballroom required.
So let's break down exactly what the mansion tax is, who pays it, the full bracket table, and the negotiation moves that can keep you out of the next tier.
What is the NYC mansion tax?
The mansion tax is a one-time New York State transfer tax on residential property sold in New York City for $1 million or more. It's paid by the buyer at closing, on top of your other closing costs.
It was created in 1989 as a flat 1% on sales of $1M+. In 2019, the state added seven more tiers on top, scaling up to 3.9% on the priciest sales. Those are the rates still in effect today.
One detail that trips everyone up: the rate applies to the entire purchase price, not just the amount over the threshold. That's different from how income tax brackets work, and it's where the real pain lives (more on that below).
The full mansion tax bracket table (2026)
| Purchase price | Mansion tax rate | Tax on a purchase at the low end of the tier |
|---|---|---|
| $1,000,000 – $1,999,999 | 1.00% | $10,000 |
| $2,000,000 – $2,999,999 | 1.25% | $25,000 |
| $3,000,000 – $4,999,999 | 1.50% | $45,000 |
| $5,000,000 – $9,999,999 | 2.25% | $112,500 |
| $10,000,000 – $14,999,999 | 3.25% | $325,000 |
| $15,000,000 – $19,999,999 | 3.50% | $525,000 |
| $20,000,000 – $24,999,999 | 3.75% | $750,000 |
| $25,000,000 and up | 3.90% | $975,000 |
Buying under $1 million? You owe zero mansion tax. That single dollar between $999,999 and $1,000,000 is the most expensive dollar in NYC real estate.
The "cliff effect" — why one dollar can cost you thousands
Because the rate hits the whole price, every bracket line is a cliff, not a ramp:
- $999,999 → mansion tax: $0
- $1,000,000 → mansion tax: $10,000
That's a $10,000 jump for one extra dollar of price. It happens again at every threshold:
- $1,999,999 at 1.0% = $19,999
- $2,000,000 at 1.25% = $25,000 → about $5,000 more for one dollar of price
So a home priced right at a threshold is almost never worth it. If a place is listed at $2,000,000, you are paying for the privilege of being in the higher bracket on the entire amount.
How to avoid the next bracket (the part agents actually negotiate)
This is where having someone in your corner pays for itself. A few legitimate, commonly used tactics when a price is sitting right on a line:
1. Negotiate just under the threshold. If a home is listed at $1,005,000, getting the seller to $999,000 doesn't just save you $6,000 in price — it erases the entire $10,000 mansion tax. The real swing is closer to $16,000. Sellers near a round number often know this and may be motivated, because the cliff scares buyers off.
2. Separate the price of fixtures and personal property. Furniture, art, a freestanding washer/dryer, and other genuine personal property can sometimes be sold under a separate bill of sale, lowering the real-property price that the mansion tax is calculated on. This has to be legitimate and properly documented — talk to your real estate attorney before assuming a number.
3. Ask the seller to cover it. In a buyer-friendly stretch, a seller concession toward the mansion tax (or transfer taxes generally) is a normal ask. It doesn't change the tax owed, but it changes who funds it.
4. Mind new construction. On new developments, sponsors frequently push transfer taxes and the mansion tax onto the buyer in the contract. That's negotiable, especially on units that have been sitting.
A word of caution: do not try to dodge the tax by artificially splitting one sale into pieces or misstating the price. The state treats related transfers as one transaction, and getting it wrong means penalties and interest. Every move above should run through your attorney.
What the mansion tax is not
- It's not an annual tax. It's one-time, at purchase. (Your yearly bill is property tax — different animal.)
- It's not based on square footage or whether the home is actually fancy. It's purely the price.
- It's not the only transfer tax at closing. NYC and NY State also charge their own transfer taxes — though those are usually the seller's cost on a resale.
Could the rates change?
As of May 2026, there are proposals floating in Albany to raise mansion tax rates and to add a separate "pied-à-terre" tax on high-end second homes, and the Governor's spring budget framework referenced the idea. Nothing has been enacted — the eight tiers above are still the law. If you're buying near a threshold, confirm the current rate with your attorney at contract, since this is an active area.
Key takeaways
- The NYC mansion tax is a one-time, buyer-paid tax on residential sales of $1M or more, ranging from 1.0% to 3.9%.
- The rate applies to the full purchase price, creating a "cliff" at every threshold — one extra dollar can cost thousands.
- The most effective way to avoid the next bracket is to negotiate the price below the threshold line.
- Buy under $1 million and you owe nothing.
Frequently asked questions
Who pays the mansion tax in NYC — buyer or seller? The buyer pays the mansion tax at closing. (Sellers typically cover the separate NYC and NY State transfer taxes on a resale.)
How much is the mansion tax on a $1 million apartment? $10,000 — a flat 1% on a purchase between $1,000,000 and $1,999,999.
Is there any way to legally avoid the NYC mansion tax? Yes — most commonly by negotiating the purchase price below $1,000,000, or below the next threshold. Allocating genuine personal property under a separate bill of sale can also reduce the taxable real-property price. Both should be reviewed by your attorney.
Does the mansion tax apply outside New York City? A statewide 1% mansion tax applies to residential sales of $1M+ across New York. The additional higher tiers (up to 3.9%) apply to properties within New York City.
Is the mansion tax a yearly tax? No. It's a one-time tax paid only at the time of purchase.
This post is for general information and isn't tax or legal advice — confirm specifics with your real estate attorney and accountant before closing.