The New York State legislature passed 2020 budget legislation which, among other things, modified the New York State Transfer Tax and the New York State Mansion Tax rates, under certain circumstances, for transfers in New York City and other cities with a population of one million or more. Below is a summary of the changes:

New York State Transfer Tax

Prior to the enacting legislation, the New York State Transfer Tax was .4% ($2.00 for every $500.00 or portion thereof). The amended statute imposes an additional transfer tax of .25% ($1.25 for every $500.00 or portion thereof), as provided below:

Consideration NYS Transfer Tax (Residential) NYS Transfer Tax (Commercial)
Less than $2 million .4% .4%
At least $2 million, but less than $3 million .4% .65%
$3 Million or more .65% .65%

Mansion Tax

Prior to the enacting legislation, the New York State Mansion Tax on transfers of residential real property for $1 million of consideration or more was 1%. The enacting legislation created a progressively higher Mansion Tax that is keyed to consideration, as follows:

Consideration NYS Mansion Tax
Less than $1 million $0
At least $1 million, but less than $2 million 1%
At least $2 Million, but less than $3 million 1.25%
At least $3 million, but less than $5 million 1.5%
At least $5 million, but less than $10 million 2.25%
At least $10 million, but less than $15 million 3.25%
At least $15 million, but less than $20 million 3.5%
At least $20 million, but less than $25 million 3.75%
At least $25 million 3.9%

Effective Dates

The enacting legislation will take effect July 1, 2019 and shall apply to conveyances occurring on or after such date. However, conveyances that occur on or after July 1, 2019 in connection with a binding written contract entered into on or before April 1, 2019 shall be exempt from the tax increases, provided that the date of execution of such contract is confirmed by independent evidence, such as the recording of the contract, payment of a deposit or other facts and circumstances as determined by the commissioner of the New York State Department of Taxation and Finance.

 

The following are examples of the impact that the additional tax would have on the conveyance of a residential property. In the following examples, State and City Transfer Taxes are paid by the seller, and the Mansion Tax is paid by the purchaser.

 

Sale Price: $2.5 million

Old Tax Rates New Tax Rates
State Transfer Tax (.4%): $10,000 State Transfer Tax (.4%): $10,000
City Transfer Tax (1.425%): $35,625 City Transfer Tax (1.425%): $35,625
Mansion Tax (1%): $25,000 Mansion Tax (1.25%): $31,250
Total: $70,625 Total: $76,875

Sale Price: $3.5 Million

Old Tax Rates New Tax Rates
State Transfer Tax (.4%): $14,000 State Transfer Tax (.65%): $22,750
City Transfer Tax (1.425%): $49,875 City Transfer Tax (1.425%): $49,875
Mansion Tax (1%): $35,000 Mansion Tax (1.5%) $52,500
Total: $98,875 Total: $125,125

Sale Price: $7 million

Old Tax Rates New Tax Rates
State Transfer Tax (.4%): $28,000 State Transfer Tax (.65%): $45,500
City Transfer Tax (1.425%): $99,750 City Transfer Tax (1.425%): $99,750
Mansion Tax (1%): $70,000 Mansion Tax (2.25%): $157,500
Total: $197,750 Total: $302,750

Sale Price: $12.5 million

Old Tax Rates New Tax Rates
State Transfer Tax (.4%): $50,000 State Transfer Tax (.65%): $81,250
City Transfer Tax (1.425%): $178,125 City Transfer Tax (1.425%): $178,125
Mansion Tax (1%): $125,000 Mansion Tax (3.25%): $406,250
Total: $353,125 Total: $665,625

 

If you have any questions about the foregoing, please contact:

Alvin Schein
aschein@seidenschein.com

Adam A. Levenson
alevenson@seidenschein.com

Jane Rosenberg
jrosenberg@seidenschein.com

Hillary Potashnick
hpotashnick@seidenschein.com

 


 

Attorney Advertising: Prior results do not guarantee a similar outcome. This post is for information purposes and is not legal advice.