Q & A: Is NY Mansion Tax Payable Under $1M?
Q: Can
Mansion Tax be payable even when the purchase price is under $1 million?
A: By Mark Maimon, VP Sterling National Bank
Content was written and provided by Mark Maimon at Sterling National Bank. Please contact Mark for all of your mortgage needs per the contact information below. All material is protected by applicable copyright laws.
A: By Mark Maimon, VP Sterling National Bank
Under
certain circumstances, yes! When doing
the calculation to determine whether a buyer is responsible for paying the
Mansion Tax, we add the purchase price to any fees that the buyer is paying
that would customarily be paid by the seller.
The most common example is the New York City and State Transfer Taxes
(commonly paid by the buyer when purchasing in a new condo building). If those costs plus the purchase price add up
to $1 million or more, then the Mansion Tax is triggered even if the
contractual purchase price for the property is under $1 million.
This is commonly referred to as “grossing up”
the purchase price.
Example:
A
buyer purchases a new condo for $995,000 and agrees to pay for NY City Transfer
Taxes on behalf of the seller.
Purchase Price: $995,000
NYC Transfer Taxes: $14,179 (1.425%
of the purchase price)
“Total Consideration”: $1,009,179 – MANSION TAX IS REQUIRED!
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