New York lawmakers are reportedly backing away from a proposed 1% tax on all-cash residential property purchases over $1 million in New York City, according to recent budget negotiations.
The proposal had been considered as a potential revenue source to help address New York City’s budget deficit. Under the plan, buyers purchasing residential real estate with cash would have paid an additional 1% transfer-style tax at closing.
Industry groups and market participants raised concerns that the tax could discourage investment activity, reduce transaction volume, and further impact liquidity in an already challenging real estate market. Critics also argued the proposal would add complexity and additional costs to high-value transactions.
While the cash purchase tax now appears unlikely to move forward, state leaders are still expected to pursue other real estate-related revenue measures, including a proposed pied-à-terre tax targeting certain luxury second homes in New York City.
The legislature continues to attack the real estate community to meet their budget. This could be a sign of the future.
We will continue monitoring any developments as final state budget negotiations progress.