Buying or selling on the Upper East Side and wondering how the mansion tax and transfer taxes might affect your bottom line? You are not alone. These taxes can add tens of thousands of dollars to your closing costs, and the rules vary by price and property type. In this guide, you will learn what each tax is, when it applies, who typically pays, and how to estimate your total so you can plan with confidence. Let’s dive in.
Quick definitions
Understanding these terms will help you read your closing statement with clarity.
- Mansion tax (New York State): A one-time state surcharge on residential purchases when the price exceeds $1,000,000. Usually paid by the buyer at closing.
- NYS Real Property Transfer Tax (state transfer tax): A separate state transfer tax based on the consideration. Often cited as 0.4 percent of the price. Typically paid by the buyer unless negotiated otherwise.
- NYC Real Property Transfer Tax (city transfer tax): A city tax on NYC real estate transfers. Residential rates step up when the price crosses a defined threshold, commonly $500,000. This is separate from the state tax and mansion tax and is usually paid by the buyer.
- Mortgage Recording Tax (MRT): A tax due when you record a mortgage. Applies to buyers who finance, and it can be significant in Manhattan. Paid by the borrower.
Always confirm current rates with the New York State Department of Taxation and Finance and the NYC Department of Finance before you sign. Municipal rules and percentages can change.
Mansion tax brackets
The mansion tax uses a graduated structure. It applies to the full purchase price when consideration exceeds $1,000,000 on a residential conveyance.
Assuming the commonly published brackets:
- $1,000,000 to $1,999,999: 1.00%
- $2,000,000 to $2,999,999: 1.25%
- $3,000,000 to $4,999,999: 1.50%
- $5,000,000 to $9,999,999: 2.25%
- $10,000,000 to $14,999,999: 3.25%
- $15,000,000 to $19,999,999: 3.50%
- $20,000,000 to $24,999,999: 3.75%
- $25,000,000 and up: 3.90%
Key point: The tax rate applies to the entire price, not just the portion above $1,000,000.
Who pays what on the UES
While responsibilities can be negotiated in the contract, market practice across Manhattan and the Upper East Side is consistent.
- Mansion tax: Commonly paid by the buyer at closing.
- State transfer tax (NYS RPTT): Usually paid by the buyer.
- City transfer tax (NYC RPTT): Usually paid by the buyer.
- Mortgage Recording Tax: Paid by the buyer if financing.
Sellers typically cover their own customary costs, which can include broker commissions and prorated building charges. Any different allocation of taxes should be stated clearly in your contract.
How to estimate your taxes
Here is a simple approach to get a quick estimate. Replace the percentages below with the current official rates before finalizing your numbers.
- Identify your purchase price bracket to select the mansion tax rate.
- Multiply the purchase price by the assumed mansion tax rate.
- Multiply the price by the state transfer tax rate (often cited as 0.4%).
- Multiply the price by the applicable NYC RPTT rate. For residential sales above $500,000, many practitioners cite 1.425% as a reference.
- Add the three results together. If you are financing, separately estimate the Mortgage Recording Tax on the mortgage amount.
Example A: UES 1-bedroom condo at $1,200,000
Assumptions: mansion tax 1.00%, NYS transfer tax 0.40%, NYC RPTT 1.425%.
- Mansion tax: $12,000
- NYS transfer tax: $4,800
- NYC RPTT: $17,100
- Combined transfer taxes: $33,900
Mortgage Recording Tax is additional if you finance.
Example B: UES home at $2,500,000
Assumptions: mansion tax 1.25%, NYS transfer tax 0.40%, NYC RPTT 1.425%.
- Mansion tax: $31,250
- NYS transfer tax: $10,000
- NYC RPTT: $35,625
- Combined transfer taxes: $76,875
Mortgage Recording Tax is additional if you finance.
Example C: UES townhouse at $5,000,000
Assumptions: mansion tax 2.25%, NYS transfer tax 0.40%, NYC RPTT 1.425%.
- Mansion tax: $112,500
- NYS transfer tax: $20,000
- NYC RPTT: $71,250
- Combined transfer taxes: $203,750
Mortgage Recording Tax is additional if you finance.
These examples are for illustration. Always ask your attorney and lender to produce a line-by-line estimate using current official rates and your exact loan amount.
Mortgage Recording Tax basics
If you use a mortgage, the Mortgage Recording Tax will be due when the mortgage is recorded. In Manhattan, this tax can add several thousand dollars to your cash-to-close, and on larger loans it can be much higher. The rate depends on the size of your mortgage and other factors.
- Plan early: Ask your lender and attorney for an MRT estimate when you make an offer.
- Cash purchases: No mortgage means no MRT, though other closing costs still apply.
- Co-ops: Most co-ops do not record a traditional mortgage. Instead, they use a security instrument that can affect how financing is handled. Confirm with your attorney how any financing impacts your costs.
Co-ops, new development, and special cases
Upper East Side transactions often involve co-ops and sponsor sales, each with its own mechanics.
- Co-op share transfers: Mansion tax generally applies on co-op purchases above $1,000,000. A co-op may also charge a flip tax or board fees, which are building specific. Review the proprietary lease and transfer documents early.
- Sponsor or new development: A sponsor may offer a credit or concession. Tax liabilities are statutory and generally remain the buyer’s responsibility unless the sponsor agrees otherwise in the contract.
- Estate or entity transfers: Certain transfers can be exempt or require special filings. Your attorney should confirm any exemptions and required documentation.
- Refunds or corrections: If price or structure changes after closing, there may be procedures to seek a refund or adjustment with the state or city. Your attorney will guide the filings.
Pricing and negotiation tips
Price positioning near a tax threshold can influence buyer psychology and total closing costs.
- List strategy near $1,000,000: Small price changes can move a purchase into a higher mansion tax bracket. Consider how this may affect buyer demand.
- Allocation of taxes: Although custom often places these taxes on the buyer, you can negotiate credits or alternative allocations. Be sure the contract’s tax-allocation clause is explicit.
- Disclose building fees: If your building imposes a flip tax or other transfer fees, disclose them early to maintain trust and reduce last-minute friction.
Buyer checklist
Use this list to stay organized from offer to close.
- Add mansion tax, state transfer tax, and city transfer tax to your cash-to-close estimate on day one.
- Ask your lender and attorney to estimate the Mortgage Recording Tax and confirm wire timing.
- Include a clear tax-allocation clause in your contract.
- Confirm property type and whether any special rules apply for condos, co-ops, or mixed-use.
- For co-ops, request the proprietary lease and transfer documents, and ask about any flip tax or board fees.
- Engage a Manhattan real estate attorney early to calculate taxes, prepare forms, and coordinate payoffs.
- For higher-priced purchases, request a detailed pre-closing statement showing every tax and fee.
Seller checklist
Prepare for buyer questions and closing logistics.
- Expect to cover customary seller-side costs such as broker commissions and prorations. Buyers typically pay the mansion tax and transfer taxes unless negotiated otherwise.
- Identify any building-imposed flip taxes or transfer fees and disclose them early.
- Consider how the mansion tax brackets intersect with your target list price.
Bottom line for UES buyers and sellers
If your Upper East Side purchase price is likely to exceed $1,000,000, the mansion tax will apply and will be calculated on the full price. You should also expect separate state and city transfer taxes, plus Mortgage Recording Tax if you finance. With the right planning and guidance, you can budget accurately and avoid surprises at the closing table.
Ready to map out your exact costs and strategy? Schedule a free consultation with Cody Parker Hellberg for a clear, local plan tailored to your goals.
FAQs
What is the NYC mansion tax for Upper East Side purchases?
- It is a New York State surcharge on residential purchases over $1,000,000, using graduated brackets applied to the full price.
Who usually pays the city and state transfer taxes in Manhattan?
- Market practice places these transfer taxes on the buyer at closing, though the allocation can be negotiated in the contract.
How is the mansion tax calculated on a $1.2M condo?
- Using a 1.00% mansion tax rate, the tax would be $12,000, plus separate state and city transfer taxes and any Mortgage Recording Tax if you finance.
Do co-op purchases pay the mansion tax above $1M?
- Yes, co-op share transfers over $1,000,000 generally incur the mansion tax, and the building may also charge a flip tax or other fees.
What should a financed buyer budget beyond transfer taxes?
- Factor in the Mortgage Recording Tax on the loan amount, along with lender fees, attorney fees, title or assurance costs, and prepaid items.
Can taxes be refunded if the price changes after closing?
- Possibly, if the transaction is corrected or restructured after closing, but you must follow state and city procedures with the proper forms and documentation.
