You found the right place in Midtown East, and now one question is front and center: will the NYC “mansion tax” apply to your purchase, and how much should you set aside for closing? You are not alone. Many buyers discover the mansion tax late in the process and scramble to adjust cash-to-close. This guide breaks down what the tax is, how it’s calculated for condos and co-ops, who typically pays it, and how to budget with Midtown East examples and practical steps. Let’s dive in.
Mansion tax basics
The New York State “mansion tax” is a surcharge on residential purchases when the consideration (purchase price) equals or exceeds $1,000,000. It is calculated as a percentage of the entire purchase price, not on just the amount above the threshold. You can review rate rules and updates on the New York State Department of Taxation and Finance’s real estate transfer tax guidance.
In most transactions, the buyer pays the mansion tax at closing. You may negotiate seller credits in the contract, but the tax itself is collected at closing and appears on your settlement statement.
The mansion tax can apply to both condos and co-ops in Midtown East. While condos transfer by deed and co-ops transfer shares with a proprietary lease, the surcharge generally looks at the consideration you pay for the residential interest.
How the tax is calculated
The arithmetic is simple. Mansion tax equals the applicable rate multiplied by the full purchase price. Here are common Midtown East price points to illustrate how buyers experience the line between just under and at or above $1,000,000:
- $975,000 purchase price: Mansion tax = $0 because the price is under the threshold.
- $1,000,000 purchase price: Mansion tax = 1% × $1,000,000 = $10,000.
- $1,250,000 purchase price: Mansion tax = 1% × $1,250,000 = $12,500.
- $3,000,000 purchase price: Mansion tax = 1% × $3,000,000 = $30,000.
Rates and any special rules are set by New York State. Always confirm the current rate for your price point by reviewing the New York State Department of Taxation and Finance’s official pages before you sign.
Condos vs co-ops: what changes at closing
The mansion tax often applies in both cases once the threshold is met, but your closing process and line items differ.
- Condos: You are buying real property. Expect title insurance, title searches, recording fees, and standard attorney and lender fees. The mansion tax is added to your buyer-side closing costs if the price meets the threshold.
- Co-ops: You are buying shares and a proprietary lease. There is no title insurance on the building’s underlying real estate, but you will see co-op application and board fees, possible flip taxes if applicable under the building’s rules, and move-in deposits. The mansion tax can still apply at or above the threshold because it is tied to consideration paid for a residential interest.
In both scenarios, confirm responsibility for each cost in your contract and review the closing statement line by line with your attorney.
Other NYC closing costs that stack
The mansion tax is only one piece of your cash-to-close. In Manhattan, several items often add up alongside it:
- New York City Real Property Transfer Tax (RPTT). The city charges transfer tax on the full consideration. You can review current thresholds and rates on the NYC Department of Finance’s Real Property Transfer Tax page.
- New York State Real Estate Transfer Tax (RETT). New York State also imposes a transfer tax, expressed as a per-thousand rate. See the New York State Department of Taxation and Finance’s real estate transfer tax guidance for details.
- Mortgage recording tax. If you are financing, New York imposes mortgage recording tax on the loan amount, with state and NYC components. See the NYC Department of Finance’s mortgage recording tax overview for city details.
- Title insurance and searches (condos), attorney fees, lender appraisal and commitment fees, building move-in and application charges, possible flip taxes set by a building, and prepaid adjustments for common charges or maintenance and real estate taxes.
As a rule of thumb, plan to budget roughly 2% to 5% of the purchase price for buyer closing costs in Manhattan, exclusive of your down payment. The mansion tax at $1,000,000 can represent a large share of the lower end of that range, but the combined impact of transfer taxes, recording taxes, and professional fees can be material.
Strategy near the $1M line
If you are shopping in Midtown East’s common $900,000 to $2,000,000 band, the $1,000,000 threshold often shapes offer strategy.
- Negotiate the whole picture. You can negotiate price and closing credits. Some sellers prefer credits over price reductions, while others focus on net proceeds. Put any agreement in the contract and model the impact on your cash-to-close.
- “Just under $1,000,000” offers. Offering slightly below the threshold to avoid the surcharge is common. Be realistic about seller expectations and competition. If a small gap stands between you and acceptance, weigh the tax against the risk of losing the property.
- Appraisal considerations. If you offer just below $1,000,000 and the property appraises higher, your lender’s view can affect timing and loan terms. The mansion tax treatment generally follows the contract price, but financing conditions can still influence your path to closing.
- Co-op specifics. If you are buying a co-op, talk with your attorney about any building flip taxes, transfer fees, or capital contributions that affect total costs and how they are allocated.
Quick budgeting example for Midtown East
Here is a simple way to think about cash-to-close for a Midtown East purchase. Exact numbers vary by property, financing, and building rules, so use this as a planning framework and confirm with your attorney and lender.
Scenario A: One-bedroom condo, $975,000, financed
- Mansion tax: Not triggered at this price.
- Transfer and recording taxes: Add NYC and NYS transfer taxes and mortgage recording tax on the loan amount.
- Professional and building fees: Title insurance and searches, lender fees, attorney fees, and building move-in or application charges.
- Prepaids: Real estate tax and common charge adjustments.
Scenario B: One-bedroom condo, $1,250,000, financed
- Mansion tax: $12,500.
- Transfer and recording taxes: NYC and NYS transfer taxes plus mortgage recording tax on the loan amount.
- Professional and building fees: Title, lender, attorney, and building charges similar to Scenario A, adjusted for price and loan size.
- Prepaids: Tax and common charge adjustments.
In both examples, a Midtown East buyer commonly sets aside several percent of the purchase price for closing costs, with the mansion tax a visible line item if the price is at or above $1,000,000.
Closing-cost checklist
Use this step-by-step list to avoid surprises and keep your purchase on schedule.
Before you sign a contract
- Ask your attorney for a preliminary closing estimate that lists the mansion tax, transfer taxes, and expected fees.
- If financing, request a lender estimate of mortgage recording tax and all loan fees.
- Discuss potential seller credits vs. price changes and model how each option impacts your cash-to-close.
At the contract stage
- Spell out who pays which taxes and fees in the contract. Clarify any seller credits toward closing costs.
- If your offer is near $1,000,000, ask your attorney to model both scenarios: just below and just above the threshold.
Before closing
- Review the final settlement statement to confirm the mansion tax, transfer taxes, and any building fees.
- Coordinate wires or certified funds and confirm instructions with your attorney.
- For co-ops, complete the board package and confirm move-in requirements, deposits, and any flip taxes.
After closing
- Save all closing documents for tax and financial records.
- Check with your accountant about the treatment of closing costs for future filings.
Verify official rates and rules
For current official guidance on transfer and recording taxes, review these resources:
- New York State Department of Taxation and Finance: real estate transfer tax overview and related guidance.
- NYC Department of Finance: Real Property Transfer Tax.
- NYC Department of Finance: mortgage recording tax.
These pages are the best places to confirm thresholds, rates, and any updates that could affect your Midtown East transaction.
Get a tailored estimate for Midtown East
If you are weighing a condo versus a co-op or deciding how to structure an offer near $1,000,000, a personalized model can save you time and stress. Share your target address or price, whether it is a condo or co-op, and if you will use financing. Our team will outline your expected mansion tax, transfer or recording taxes, and typical building and professional fees so you can move forward with confidence.
Have questions about a specific listing or board requirements in Midtown East? Book a private consultation with Dana Sapir for a precise, property-specific closing cost estimate and strategy.
FAQs
What is the NYC mansion tax for a $1,000,000 Midtown East condo?
- For a $1,000,000 purchase, the illustrative calculation is 1% of the full price, or $10,000; confirm the current rate on New York State’s official pages before you sign.
Does the NYC mansion tax apply to Midtown East co-ops?
- Yes, many co-op purchases at or above $1,000,000 trigger the surcharge because it looks at consideration paid for a residential interest, even though co-ops transfer shares and a proprietary lease.
Who typically pays the mansion tax at closing?
- The buyer usually pays the tax at closing; parties can negotiate credits, but the surcharge is collected and shown on the settlement statement.
How does the mansion tax affect my mortgage and cash-to-close?
- It does not change your loan amount directly, but it increases the cash you must bring to closing and can influence your liquidity and timing.
Can I avoid the mansion tax by offering $999,999 in Midtown East?
- Offers just under the threshold are common, but seller expectations and appraisals can affect outcomes; never misreport consideration, and confirm structure and obligations with your attorney.
