All-Cash Buyers in New York Could Face a New Tax on Homes Sold for Over $1 Million

New York state lawmakers are drafting a budget proposal that targets real estate. The proposal would add a one-percent tax on all-cash home purchases above $1 million, removing an existing exemption that applies to cash buyers under current rules. Officials estimate the change could raise about $160 million in New York City and may be extended to surrounding areas. Cash deals have recently made up 60 percent of city sales and most transactions above $3 million, so the tax could affect high-end market activity. Lawmakers are also pursuing a pied-à-terre tax on New York City properties valued at $5 million or more that are not primary residences, with rates varying by property type. The surcharge would be paid in addition to standard property taxes and could apply to about 10,000 properties, potentially generating $500 million annually.

"Under current rules, buyers with a mortgage pay a one-time state tax at closing, while cash buyers are exempt. The proposed change would eliminate that gap, requiring all-cash purchasers in excess of $1 million to pay the same levy. Officials estimate it could generate about $160 million in New York City alone, with discussions underway to extend it to the suburbs, the Hamptons, and the Hudson Valley."

"The move could significantly impact the market, as data from the nonprofit Center for New York City Neighborhoods shows cash deals recently accounted for 60 percent of city sales and nine out of ten transactions above $3 million."

"Lawmakers are also pushing a so-called pied-à-terre tax on New York City properties valued at $5 million or more that are not used as a primary residence. Backed by Governor Kathy Hochul and Mayor Zohran Mamdani, the annual surcharge targets part-time residents who benefit from rising property values but do not contribute to local economic activity through day-to-day spending."

"Homeowners would pay the surcharge on top of their standard property taxes as the city develops a new valuation system over the next two years. State officials estimate roughly 10,000 properties would qualify, potentially generating $500 million annually to help narrow the city's budget deficit."

Read at Robb Report