The NYC Mansion Tax in 2026, Revisited: What Passed, What Didn’t, and the New Tax Nobody Was Talking About

In April, we shared news about a proposal in the state budget that would have changed the NYC mansion tax. The plan was to lower the threshold from $1 million to $500,000, make sellers pay instead of buyers, and add new tax brackets. We mentioned then that things could change before anything became final, and they did. Here’s what actually happened, what it means for Brooklyn buyers and sellers this fall, and the one real change from Albany that was overlooked by many.

The mansion tax proposal did not pass

Governor Hochul signed the FY2027 budget on May 28, 2026, but left the mansion tax changes out. There is no new $500,000 threshold, no switch to sellers paying, and no new tax brackets. Another idea for a 1% surcharge on all-cash residential purchases over $1 million was also removed before the budget was finalized.

The mansion tax remains the same as it was in 2019. It applies to residential purchases of $1 million or more, and buyers pay it at closing. The rate increases with the price: 1 percent from $1 million to $2 million, 1.25 percent up to $3 million, 1.5 percent up to $5 million, 2.25 percent up to $10 million, and up to 3.9 percent for prices above $25 million. The tax is charged on the full purchase price, not just the amount over the threshold. That’s why a $999,000 contract and a $1,000,000 contract have a $10,000 difference in closing costs, and why many Brooklyn deals are negotiated to $995,000.

The transfer taxes that sellers pay have not changed either. The state charges 0.4 percent, which goes up to 0.65 percent for residential sales of $3 million or more in the city. The city’s transfer tax is 1 percent for sales of $500,000 or less and 1.425 percent for sales above that. Sellers, this is still your responsibility on the closing statement. If you’re selling a new development or sponsor unit, buyers should still expect to cover this cost.

If you read our April post and started planning for a seller-paid tax, you can set those plans aside. If you were a buyer hoping the state would remove the mansion tax from your closing costs, unfortunately, that did not happen.

What did pass instead: a pied-à-terre tax

The real estate measure that made it into the budget is an annual surcharge on non-primary residences in New York City. It takes effect on July 1, 2026, with the first payment due January 1, 2027. The state has been in discussions about this idea for nearly a decade, and it has finally passed.

Understanding how the tax works is important. A property is considered a primary residence if it is occupied more than half the year by the owner, a family member, or a tenant with a lease of at least one year. If not, and the property is valuable enough, the surcharge is added to the regular property tax.

For one- to three-family houses, the surcharge starts at a market value of $5 million (0.8 percent, rising to 1.3 percent for values above $25 million). For co-ops and condos, during the first two years, the tax is based on assessed value instead of market value, starting at $1 million assessed, with rates from 4 to 6.5 percent.

Since assessed values for co-ops and condos are usually much lower than their sale prices, a $1 million assessed value often means the unit is worth several times that amount. Starting in July 2028, the city will use a comparable-sales model to align the property types. For clients, this is a non-event. It’s aimed at the empty high-floor apartment that’s owned by an LLC and lit up two weeks a year.

But two groups in our neighborhoods should read the fine print. If you own a condo you rent out, make sure the lease is a real, arm’s-length lease of a year or more, because that’s what keeps the unit classified as a primary residence for the tenant and out of the surcharge. And if you own a second home in the city, or you’re helping an adult child buy a place you’ll hold title to, talk to your accountant before you assume you’re under the line.

Our perspective on this

To be honest, this outcome is better than what we expected back in April.

The mansion tax proposal would have lowered the threshold to $500,000, which is not a mansion in Brooklyn. That’s the price of a one-bedroom co-op in Carroll Gardens or a two-family home in Red Hook that a family may have been trying to buy for years. Lowering the threshold would have affected many regular buyers, not just luxury buyers, especially those already struggling with high rates and low inventory. Making sellers pay instead would not have helped, since they would likely have added the cost back into the price.

The pied-à-terre tax, while not perfect, at least targets the right issue. Empty housing in a city facing a housing emergency is a policy problem, not just a lifestyle choice. Taxing these properties is one of the few ways the city can address this without affecting people who actually live here.

What to watch for next: Albany rarely drops ideas for good; it usually just puts them aside for a while. The seller-paid, lower-threshold mansion tax will likely come back in a future budget, probably as a way to raise money for housing. When it does, the key questions will be the same as before: Who actually pays, and at what price does a home count as a “mansion”?

What you should do now

If you are buying, the mansion tax has not changed, so the $1 million threshold still applies. Budget for it and negotiate with it in mind. If you are selling, your transfer taxes are also unchanged, so price your property accordingly and do not let anyone tell you the law has changed. If you own property in the city that you do not live in, check your status. If you are not sure which situation applies to you, we are here to help.