If you’re buying or selling residential real estate in NY State or NYC and the sale price is $1 million or more, there’s an important tax rule to know: in addition to the standard real estate transfer tax, the state imposes a special 1 % “additional tax” often referred to as the mansion tax.

This guide breaks down what this tax is, who pays it, when it applies, and key scenarios that homeowners and homebuyers encounter.

What Is the Additional Tax?

In addition to the regular New York State Real Estate Transfer Tax (which applies to any property sale over $500), an additional tax of 1 % is imposed on residential real property transfers with total consideration of $1 million or more. This is a separate tax specifically tied to higher-value transactions.

Who Pays the Tax?

The buyer (grantee) is responsible for paying the additional 1 % tax.
For example, if a home sells for $1,200,000, the buyer must pay a $12,000 additional tax.

What Counts as Residential Real Property?

For the additional tax to apply, the property must be used — or capable of being used — as residential real estate. This includes:

• One-, two-, or three-family homes
• Individual condominiums
• Cooperative apartment units

Important: Even if the buyer plans to convert the property to commercial use later, the tax still applies because the property was residential at the time of conveyance.

Common Scenarios & Clarifications

1) Seasonal or Vacation Homes

Got a summer cottage in the Catskills? If it’s sold for $1 million or more, the tax still applies — even if the seller only uses it part of the year.

2) Multiple Units Conveyed Together

If multiple condos or co-op units are sold to the same buyer and they are connected or used together as one residence, the total price counts toward the $1 million threshold.

3) Mixed-Use Properties

If a two-family house includes commercial space and residential space, and the total sale price is $1 million or more, the tax still applies based on the residential portion.

4) Interests in Entities That Own Residential Property

The additional tax also applies when someone buys or acquires a controlling interest in an entity (like an LLC) that owns residential real estate worth $1 million or more.

When Do You Pay It?

The additional tax is paid at the same time as the regular transfer tax. It is filed using Form TP-584 (the combined transfer tax return) and typically due within 15 days after the deed conveying the property is delivered.

What’s Not Subject to the Tax

Certain transfers are not subject to the additional tax, including:

• Transfers to the State of New York or a government agency
• Transfers to the United States government
• Transfers to organizations like the United Nations

A Few Practical Tips

Buyer and seller negotiations matter – even though the law says the buyer pays the tax, real-world contracts sometimes shift responsibilities, so confirm who’s responsible in your sales agreement.

Understand your contract and closing costs – property price, mortgage assumptions, and liens can affect how the tax is computed — especially for the regular transfer tax versus the additional tax.

For corporate sales or entity transfers, consult your tax advisor — these situations can be complex and may trigger both the regular transfer tax and the additional tax.

Bottom Line

If you’re involved in the sale or purchase of residential property in New York State valued at $1 million or more, you need to understand the additional 1 % tax that gets added on top of the regular transfer tax. It’s not just a fee — it’s a state-mandated tax that can significantly impact closing costs and negotiations. If you have any questions about the Mansion Tax, feel free to Contact Us anytime.