New York homebuyers could avoid mansion tax until $2 million

A proposal in New York would make the state’s mansion tax kick in at a higher price. Sen. Pete Harckham’s bill would raise the threshold for the 1% residential transfer tax from $1 million to $2 million.

That would matter most for buyers and sellers at the upper end of the market. More home sales would clear the closing table without this added tax, while deals above the new line would still face it.

What the tax would cover

The bill uses a broad definition of residential property. It would apply to a conveyance of residential real property or an interest in it when the full sale price reaches the threshold.

That includes any property that is, or could be, used as a personal residence. It also includes one-, two- and three-family homes, individual condominium units and cooperative apartment units.

The rate would stay at 1% of the price, or the part of the price tied to the residential property. It would also be collected the same way and at the same time as the existing transfer tax, so the closing process would stay familiar.

The cutoff would move with prices

Starting Jan. 1, 2027, the $2 million threshold would not stay fixed. It would be adjusted each year for inflation using the consumer price index for all urban consumers, known as CPI. The bill uses average monthly CPI values from the 12 months ending the previous June 30, then rounds to the nearest thousand dollars.

That kind of update helps the cutoff keep pace with the market. Without it, a fixed threshold can slowly cover more homes over time even if lawmakers did not mean to expand the tax that far.