New York Mansion Tax and Transfer Taxes Explained: What Buyers and Sellers Pay

Transfer Taxes in New York: Mansion Tax, Transfer Tax, and Mortgage Recording Tax

New York imposes more layers of closing taxes than almost any other state. Buyers and sellers face state transfer taxes, city transfer taxes (in NYC), a mansion tax on purchases of $1 million or more, and a mortgage recording tax that adds nearly 2% to the cost of financing. On a $2 million NYC apartment purchase with an 80% mortgage, these taxes alone total roughly $95,000 — before you’ve paid your attorney, title insurance, or any other closing cost.

This guide breaks down each tax, who pays it, and how the numbers add up at various price points. If you’re buying or selling in New York, these costs should be in your budget from the first day you start looking.

The Mansion Tax: Progressive Rates Starting at $1 Million

Despite its name, the mansion tax applies to apartments, co-ops, and modest homes — any residential purchase of $1 million or more. In New York City and the surrounding counties, $1 million buys a one-bedroom apartment, not a mansion. The tax is paid by the buyer.

For purchases between $1 million and $2 million, the mansion tax is a flat 1% of the entire purchase price — not just the amount above $1 million. This means a $999,999 purchase pays $0 in mansion tax, while a $1,000,000 purchase pays $10,000. That cliff effect makes pricing just below $1 million a common strategy for sellers trying to attract budget-conscious buyers.

In 2019, New York enacted a progressive mansion tax schedule for NYC purchases of $2 million and above. The rates increase at higher price thresholds:

The rate applies to the entire purchase price, not just the amount within each bracket. A $5,000,000 purchase pays 2.25% on the full $5,000,000 ($112,500), not a blended rate across brackets. This creates significant cliff effects at each threshold.

Outside NYC, the mansion tax is a flat 1% on purchases of $1 million or more statewide. The progressive rates above $2 million apply only to New York City.

New York State Transfer Tax

The state transfer tax is paid by the seller (by custom and typical contract terms, though the parties can negotiate differently). The rates are:

• $2 per $500 of consideration (0.4%) for residential properties sold for less than $3,000,000
• $3.25 per $500 of consideration (0.65%) for residential properties sold for $3,000,000 or more

Like the mansion tax, the higher rate applies to the entire sale price, not just the amount above $3 million. A sale at $2,999,999 pays $11,999 in state transfer tax (0.4%), while a sale at $3,000,000 pays $19,500 (0.65%). That one-dollar difference in price costs the seller an extra $7,500 in tax.

The state transfer tax applies to all real property conveyances in New York, including condos and houses. Co-op transfers (which are technically stock transfers, not real property conveyances) are also subject to the state transfer tax under a special provision.

New York City Transfer Tax

In addition to the state tax, NYC imposes its own transfer tax — also customarily paid by the seller. The NYC rates are:

• 1.0% of the sale price for residential properties sold for $500,000 or less
• 1.425% of the sale price for residential properties sold for more than $500,000

For most NYC transactions (given that median sale prices well exceed $500,000), the effective city transfer tax rate is 1.425%. Combined with the state transfer tax, sellers in NYC typically pay 1.825% to 2.075% of the sale price in transfer taxes before they account for broker commissions, attorney fees, or any flip tax.

Mortgage Recording Tax

The mortgage recording tax is paid by the buyer and applies when recording a mortgage on real property in New York. In NYC, the rates are:

• 1.8% of the mortgage amount for loans under $500,000
• 1.925% of the mortgage amount for loans of $500,000 or more

This is one of the largest buyer closing costs in NYC. On a $1,200,000 mortgage, the tax is $23,100. On a $600,000 mortgage, it’s $11,550.

Outside NYC, the mortgage recording tax varies by county but is generally lower — typically 1.05% to 1.3% of the mortgage amount.

Co-op exception: Buyers of co-op apartments do not pay the mortgage recording tax, because a co-op loan (a share loan) is not a mortgage on real property. This saves co-op buyers thousands of dollars at closing and is one of the significant financial advantages of co-op ownership. The building’s corporation pays the mortgage recording tax on any underlying building mortgage, but individual shareholders are not taxed on their personal share loans.

For buyers determining how much they need to bring to closing, our closing cost calculator accounts for these taxes in your estimates.

Total Tax Burden at Various Price Points

The following table shows the combined closing tax costs for NYC condo purchases at representative price points. The buyer column includes mansion tax plus mortgage recording tax (assuming 80% financing). The seller column includes state and city transfer taxes. This does not include broker commissions, attorney fees, title insurance, or other non-tax closing costs.

Note: MRT = Mortgage Recording Tax. Actual amounts vary based on exact loan amount and rounding. Seller taxes assume NYC residential property sold above $500,000 but below $3M for the state rate. Co-op buyers would pay $0 in mortgage recording tax, significantly reducing buyer tax totals.

At $2,000,000, total closing taxes alone exceed $92,000. That’s before broker commissions (typically 5-6% of the sale price, paid by the seller) and other closing costs. The financial weight of these taxes is a primary reason that careful budgeting matters — use our affordability calculator to factor these costs into your purchasing power.

Who Pays What: Customs and Negotiations

By long-standing NYC custom:

Buyer pays: Mansion tax, mortgage recording tax, their own attorney fees, title insurance and search fees (condo only), building application fees (co-op only), and miscellaneous recording fees.

Seller pays: State transfer tax, city transfer tax, their own attorney fees, broker commission, flip tax (co-op only), and any outstanding building charges.

These customs are exactly that — customs, not legal requirements. Everything is negotiable. In a buyer’s market, sellers may agree to pay a portion of the buyer’s closing costs or offer a credit. In a hot market, buyers occasionally agree to pay the seller’s transfer tax to sweeten their offer. Any deviation from custom should be clearly spelled out in the purchase contract.

One common negotiation tactic: on properties priced near $1,000,000, sellers sometimes lower the price to $999,999 to help the buyer avoid the mansion tax. The $1 reduction saves the buyer $10,000, making the property effectively more affordable without costing the seller meaningful proceeds.

New Development: Additional Tax Considerations

When buying a new development condo from a sponsor (developer), the closing cost allocation often shifts:

Sponsor typically pays: State and city transfer taxes (standard), their own attorney fees, and sometimes a contribution toward the buyer’s closing costs as a sales incentive.

Buyer pays: Mansion tax, mortgage recording tax, attorney fees, title insurance, and — uniquely in new development deals — the buyer often pays the sponsor’s transfer taxes as well. This is written into the offering plan and purchase agreement. In new development transactions, it’s common for the buyer to pay both sides of the transfer tax, adding 1.825% to 2.075% to the buyer’s costs.

Read the offering plan’s closing cost section carefully before signing. If the contract requires you to pay the sponsor’s transfer taxes, factor that into your total cost comparison against resale properties.

Tax Planning Strategies

Several legitimate strategies can reduce your closing tax burden:

Buy a co-op instead of a condo. Eliminating the mortgage recording tax saves 1.8-1.925% of your loan amount. On a $1,000,000 mortgage, that’s roughly $19,250 in savings. Co-ops also have lower closing costs generally because there’s no title insurance requirement.

Price below the cliff. If you’re close to a mansion tax threshold, negotiate the price below it. The mansion tax on a $1,000,000 purchase is $10,000; on a $999,000 purchase, it’s $0. Work with your agent and attorney to structure the deal appropriately.

CEMA (Consolidation, Extension, and Modification Agreement). If you’re buying a condo or house where the seller has an existing mortgage, you may be able to “assign” the seller’s mortgage to reduce your mortgage recording tax. You only pay the tax on the new money — the difference between your mortgage and the seller’s remaining balance. On a $1,000,000 purchase where the seller’s remaining mortgage is $400,000 and your new mortgage is $800,000, you’d pay the MRT only on the $400,000 of new money, saving roughly $7,700. Not all sellers or their lenders cooperate with CEMAs, and the process adds complexity, but the savings can be significant.

Purchase as LLC or trust. Some buyers use LLCs to purchase property. Be aware that NYC imposes an additional 1% transfer tax on purchases by entities (the “supplemental tax”), which can negate any perceived benefits. Consult with a real estate attorney and tax advisor before structuring a purchase through an entity.

Outside NYC: How Taxes Differ

Buyers and sellers outside New York City face a simpler and less expensive tax structure:

Mansion tax: Still 1% on purchases of $1 million or more, statewide. But the progressive rates (1.25% to 3.9%) only apply within NYC. A $5,000,000 house in Westchester pays 1% mansion tax ($50,000), while the same purchase in Manhattan pays 2.25% ($112,500).

Transfer tax: The state transfer tax rates (0.4% / 0.65%) apply statewide. There is no city transfer tax outside NYC (some localities may impose small recording surcharges, but nothing comparable to NYC’s 1% / 1.425%).

Mortgage recording tax: Varies by county but is generally 1.05% to 1.3% — significantly less than NYC’s 1.8% to 1.925%. This is one reason total closing costs on Long Island, in Westchester, and upstate are materially lower than in the five boroughs.

If you’re comparing properties inside and outside NYC, the difference in closing taxes is substantial enough to affect your debt-to-income calculations and how much cash you need to close.

Frequently Asked Questions

Does the mansion tax apply to co-op purchases?

Yes. Even though a co-op purchase is technically a transfer of shares rather than real property, the mansion tax applies to co-op transactions in the same way it applies to condos and houses. The 1% rate (and progressive NYC rates for purchases above $2 million) is calculated on the full purchase price of the shares.

Can the seller pay the mansion tax instead of the buyer?

By custom, the buyer pays the mansion tax. However, like all closing costs, it’s negotiable. A seller could agree to credit the buyer for the mansion tax amount, effectively paying it. This is more common in buyer’s markets or for properties that have been sitting on the market. Any arrangement should be documented in the purchase contract.

Is the mortgage recording tax deductible on my federal tax return?

No. The mortgage recording tax is not deductible as a real estate tax or as mortgage interest. It’s treated as a cost of obtaining the loan and is added to the cost basis of the property. This means it reduces your taxable gain when you eventually sell, but provides no immediate tax benefit. For the same reason, it’s not included in your mortgage payment calculation — it’s a one-time closing cost, not a recurring expense.

What happens if I refinance — do I pay the mortgage recording tax again?

Generally yes, but you may be able to reduce the amount through a CEMA. If your refinance lender agrees to a consolidation, extension, and modification agreement, you pay the mortgage recording tax only on the additional amount borrowed above your existing mortgage balance. If you’re refinancing a $700,000 mortgage into a new $700,000 mortgage (for a lower rate), a CEMA would result in $0 additional mortgage recording tax. Without a CEMA, you’d pay the full tax on the new mortgage amount. Check if your lender offers CEMA refinances — not all do, and there’s typically a CEMA fee of $500 to $1,500. Explore current refinance scenarios with our mortgage calculator.

Are there any exemptions from New York transfer taxes?

Limited exemptions exist. Transfers between spouses (including as part of a divorce), transfers to or from government entities, and certain transfers to or from trusts where the grantor is the beneficiary may be exempt from state and/or city transfer taxes. Transfers by deed in lieu of foreclosure are also exempt from the city transfer tax. Most arm’s-length residential sales do not qualify for any exemption. Consult your attorney to determine if any exemptions apply to your specific transaction. If your assessment seems too high, see our how to appeal your property tax in New York.

Planning Your Budget

New York’s closing taxes add a layer of cost that many buyers from other states don’t expect. For a $1.5 million NYC condo purchase with 80% financing, budget approximately $38,000 in buyer taxes alone — mansion tax plus mortgage recording tax. Add attorney fees, title insurance, and building-related fees, and total buyer closing costs can exceed $60,000.

For sellers, transfer taxes of 1.825% to 2.075% (in NYC) come directly off your proceeds, on top of broker commissions. On a $1.5 million sale, expect to pay roughly $27,000 to $31,000 in transfer taxes before commissions.

The best approach is to run exact numbers early. Use our closing cost calculator to estimate buyer costs and our seller resources to understand your net proceeds. Knowing these figures before you start making offers prevents unpleasant surprises at the closing table.