April 12, 2019 Effective July 1, 2019 Supplemental New York State Transfer and Mansion Tax

The 2020 NYS Budget Bill (S0159/A2009) included increases to the NYS transfer tax and NYS mansion tax, which affect real property in New York City as well as any other city in New York State with populations of one million or more.

In addition to the current NYS Transfer tax of $2.00 per $500.00 of consideration or fractional part thereof imposed by Tax Law §1402(a), by adding an additional $1.25 per $500.00 of consideration or fractional part thereof on conveyances of real property located in New York City or a city in New York State with a population of one million or more, on residential properties where the consideration is $3,000,000.00 or more, and for all other properties the consideration is $2,000,000.00 or more. This tax is paid by the seller and subject to the exemptions and conditions contained in the NYS Tax Law.

Total Consideration                                    Transfer Tax Residential            Transfer Tax Non Residential

Under $2,000,000.00                                 $2 per $500 (.4%)                          $2 per $500 (.4%)

$2,000,000.00 to $3,000,000.00               $2 per $500 (.4%)                          $3.25 per $500 (.65%)

$3,000,000.00 or more                              $3.25 per $500 (.65%)                  $3.25 per $500 (.65%)

In addition to the 1% tax on conveyances of residential real property per Tax Law §1402-a (commonly known as “Mansion Tax“), the bill also adds a new section 1402-b which is supplemental to the existing 1% tax. The supplemental mansion tax is on conveyances of residential real property located in New York City or a city in New York State with a population of one million or more. The supplemental mansion tax increases based upon the amount of total consideration. This tax is paid by the buyer.

Total Consideration                                                            Mansion Tax (as of July 1, 2019)

$1,000,000.00 or less                                                                 Not subject to tax

$1,000,000.00 to 1,999,999.99                                                    1%

$2,000,000.00 to 2,999,999.99                                                    1.25%

$3,000,000.00 to 4,999,999.99                                                    1.5%

$5,000,000.00 to $9,999,999.99                                                  2.25%

$10,000,000.00 to $14,999,999.99                                              3.25%

$15,000,000.00 to $19,999,999.99                                              3.5%

$20,000,000.00 to $24,999,999.99                                              3.75%

$25,000,000.00 or more                                                               3.9%

 

For purposes of these sections, “residential real property” includes any premises that is or may be used in whole or in part as a personal residence, and shall include a one, two or three-family house, and individual condominium unit, or a cooperative apartment unit.

 

The new transfer and mansion tax rates take effect on July 1, 2019 for conveyances occurring on or after July 1, 2019. If you close after the effective date but can prove you entered into a binding contract on or before April 1, 2019, as confirmed by independent evidence such as the recording of the contract, payment of the contract deposit or other facts and circumstances as determined by the Commissioner of Taxation and Finance, the parties will be permitted to pay the current rates. If you enter into a contract, close, record, and pay the transfer tax by June 30, 2019, you will also pay the current rates.

 

Please note the definitional changes made to NYS Tax Law Section 1402. Section 1402 of the NYS Tax Law as amended by the budget bill has changed the definition of residential real property to include a one, two, or three-family dwelling, an individual condominium unit or a cooperative apartment that is or may be used in whole or in part as a personal residence:

 

The new transfer and mansion taxes shall be paid in the same fashion as the current transfer and mansion taxes.

 

Please feel free to contact us to discuss any questions regarding this matter at 516-683-1000.