While a proposed pied-à-terre tax flamed out in the state legislature in the final days of budget negotiations, buyers of high-priced homes will still have to shell out a bit more in the coming months.
The legislature passed a new “progressive mansion tax” as part of the FY2020 budget, which will levy a one-time fee on home purchases of $1 million or higher. The tax increases as the price of a home does: There’s a flat 1 percent tax on homes valued at $1 to $2 million, 1.25 percent on ones valued at $2 to $3 million, and so on; it ultimately tops out at 4.15 percent for homes valued at $25 million or more. (Bloomberg has a handy chart with all the figures.)
This, coupled with a one-time transfer tax, is expected to generate $365 million annually, which can then be put toward funding the MTA.
But what does that tax actually look like in practice? To get a sense of what buyers will pay, the Real Deal created a calculator that takes both the transfer and new mansion taxes into account; they also crunched the numbers on the priciest sales of 2018 to see how, exactly, the highest of high earners might be affected by the new taxes.
Let’s use a more recent pricey sale as an example—namely, Ken Griffin’s $238 million penthouse at 220 Central Park South, which spurred the renewed push for a pied-à-terre tax in the first place. Previously, taking city and state taxes into account, a buyer would pay an additional $6.723 million on that property. But under the new laws, that buyer would see their taxes—one-time ones, mind you—go up to $14 million.
On the lower end of things, a $3 million home would have previously garnered an additional $84,750 in taxes; under the new law, that will jump to $107,250.
The new tax will go into effect on July 1.