In Manhattan, the buyer usually pays the mansion tax, which is 1% of the full price on any home of $1 million or more, and the seller usually pays the city and state transfer taxes, which start at 1% and $2 per $500 of the price. Below, I cover who pays what, how the brackets work, what the 2026 state budget did and did not change, and how I help clients plan for closing.
What taxes does a buyer pay when buying a Manhattan apartment?
A buyer in Manhattan pays the mansion tax on any home priced at $1 million or more, and pays an extra city supplemental tax once the price reaches $2 million. A buyer who finances a condo or townhouse also pays the mortgage recording tax on the loan.
The New York State Department of Taxation and Finance describes the mansion tax as an additional tax of 1% of the sale price on residences with consideration of $1 million or more, paid by the buyer. It also lists the New York City supplemental tax on residential sales of $2 million or more, with incremental rates from 0.25% to 2.9%, also paid by the buyer. The supplemental tax took effect on July 1, 2019.
The rate applies to the entire price, not just the amount above the threshold. That is why a single dollar matters. At $999,999 the mansion tax is zero. At $1,000,000 it is 1% of the full price, or $10,000. I wrote more about that line in Is $1 Million Still a Lot of Money in New York City?
How does the mansion tax work at each price level?
The mansion tax stays at 1% at every price from $1 million up, and the city supplemental tax is added on top in steps starting at $2 million. Here is the schedule from the state’s Form TP-584-NYC instructions (revised August 2025).
| Purchase price | Mansion tax (buyer) | NYC supplemental tax (buyer) |
|---|---|---|
| Under $1,000,000 | None | None |
| $1,000,000 to under $2,000,000 | 1% | None |
| $2,000,000 to under $3,000,000 | 1% | 0.25% |
| $3,000,000 to under $5,000,000 | 1% | 0.5% |
| $5,000,000 to under $10,000,000 | 1% | 1.25% |
| $10,000,000 to under $15,000,000 | 1% | 2.25% |
| $15,000,000 to under $20,000,000 | 1% | 2.5% |
| $20,000,000 to under $25,000,000 | 1% | 2.75% |
| $25,000,000 and above | 1% | 2.9% |
Each step applies to the whole price once you cross it, so a deal just under a bracket line can save the buyer more than the price difference.
What transfer taxes does a seller pay in Manhattan?
A Manhattan seller normally pays two transfer taxes: the New York City Real Property Transfer Tax and the New York State transfer tax.
The city tax is 1% of the price at $500,000 or less and 1.425% above $500,000, according to the NYC Department of Finance’s 2025 transfer tax report (August 2026). The report says the seller is normally liable and that the tax covers houses, condo units, and co-op apartments, including resales of co-op shares. The state tax is $2 for every $500 of price, and for New York City residential sales of $3 million or more an additional base tax of $1.25 for every $500 applies, according to the state tax department.
| Sale price | NYC transfer tax (seller) | NYS transfer tax (seller) |
|---|---|---|
| $500,000 or less | 1% | $2 per $500 (0.4%) |
| Over $500,000 to under $3,000,000 | 1.425% | $2 per $500 (0.4%) |
| $3,000,000 and above | 1.425% | $3.25 per $500 (0.65%) |
In new development, the sponsor’s contract often asks the buyer to pay the sponsor’s transfer taxes. That is negotiable, and some sponsors offer to cover them as an incentive, so read that clause with your attorney before you sign.
Do co-op and condo buyers pay the same closing costs?
No. Co-op and condo buyers pay the same mansion tax, but co-op buyers do not pay the mortgage recording tax.
The NYC Department of Finance states that mortgages on individual cooperative apartments do not incur liability under the mortgage recording tax. For a condo or townhouse loan, the Carter Ledyard & Milburn rate summary (rates as of July 1, 2019) puts the combined city and state mortgage recording tax at 2.05% on loans under $500,000 and 2.175% on loans of $500,000 or more, with the lender paying the 0.25% special additional tax on homes of up to six units.
Condo buyers also buy title insurance, while co-op buyers pay for a lien search and the board’s application fees. Many co-ops charge a flip tax on resales, and each building’s rules set the amount and who pays it.
Did the 2026 state budget change any of these taxes?
The 2026 state budget left out the proposed tax on all-cash home purchases, and the state and city still publish a 1% mansion tax and a 1.425% city transfer tax on sales over $500,000. What the budget did add is a pied-à-terre surcharge on certain second homes valued above $5 million, effective July 1, 2026.
In March, The Real Deal reported that the Mamdani administration asked Albany for a higher mansion tax and a higher transfer tax on cash-only deals over $1 million. By May 28, Foley & Lardner reported that the proposed state tax on all-cash transactions above $1 million “did not survive negotiations,” while the pied-à-terre tax passed for residential properties worth more than $5 million whose owners live primarily outside New York City. That surcharge is a yearly cost of ownership, not a closing cost, but it belongs in the math for a second home.
What other closing costs should buyers and sellers plan for?
Beyond taxes, buyers and sellers each pay their own attorney, and a buyer who finances pays the lender’s fees and the appraisal.
Buyers usually plan for:
- Attorney fees for contract review and closing
- Lender fees, the appraisal, and the mortgage recording tax on a condo or townhouse loan
- Title insurance for a condo or townhouse, or a lien search for a co-op
- Board application, processing, and move-in fees in co-ops and many condos
Sellers usually plan for:
- The broker’s commission
- City and state transfer taxes
- Attorney fees
- A co-op flip tax, if the building charges one
First-time buyers can find a simpler breakdown in my post on first-time closing costs in Manhattan.
What do I tell my clients about closing costs and transfer taxes?
I tell my clients to price the taxes before they price the offer. Closing costs are not a surprise if you build them into the number on day one.
When I work with buyers, I run the math at every bracket line near their budget. A buyer looking at $2.1 million should know exactly what changes at $1.99 million, and so should the seller. I also remind co-op buyers that the cash for closing comes on top of the down payment and on top of the liquidity the board will want to see after closing. With rates where they are, the cost of the money matters as much as the price, which I covered in The Price of the Apartment vs. the Cost of the Money.
When I work with sellers, I show the net, not the gross. Two offers that look close can net very differently once the brackets, a flip tax, and concessions are counted. I have practiced real estate law, and I still tell every client the same thing: have your own attorney and CPA confirm the numbers for your deal before you sign.
I talk through how these costs play out in real deals in this short video.
If you are planning a purchase or sale and want a clear estimate of what you will pay or net at closing, request a confidential consultation. To get my quarterly read on the market, sign up for The Franco Report, or read the Q3 2026 edition.
About the author. Michael J. Franco is a top producing broker at Compass with more than 20 years of experience as a broker, attorney, and investor. The Wall Street Journal and Real Trends ranked him number 13 in Manhattan and number 100 in the United States.
This post is for general information and is not financial, legal, or tax advice. Compass is a licensed real estate broker. Equal Housing Opportunity.
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