In this video, we're gonna walk you through how to use the New York City
mansion tax calculator available at hauseit.com. This is the interface of the
calculator itself on the left. You have the ability to input the sale price as
well as the property type these two inputs are going to impact both the rate
of the mansion tax as well as the dollar amount that you would pay at closing and
it's worth remembering that the mansion tax is a buyer closing cost here in the
city. Although technically, the mansion tax is a transfer tax and sellers paid
transfer taxes the mansion tax is really a stand alone tax. It's not referred to
along with your seller New York City in here estate transfer taxes so looking at
the calculator we have an input here of 1 million and that's because the mansion
tax only comes into effect. If you're buying a property, that's 1 million
dollars or more the original mansion tax was actually implemented in 1989 and at
the time it was affixed, 1% transfer tax. Now what's happened is in 2019 there
were some changes to the New York tax law which did change the mansion tax
from what was previously a fixed 1 percent regardless of sale price to a
more progressive system which you can see here consisting of 8 individual tax
brackets so the tax rate itself has not changed for sale prices from 1 million
to less than 2 million but as you go above 2 million at or above 2 million
the tremendous rate can go up significantly and it tops out at three
point nine percent for purchases of 25 million dollars or more. So going back
into the calculator here we can see that if we adjust the sale price to something
that's higher than 1 to 2 million, we're gonna get a higher mansion tax rate of
1.25 percent. So the calculator here should be
generating an output for the mansion tax which is consistent with these tax
brackets. We can test it again using 20 million as the purchase price so let's
add another zero and that's going to give us a mansion tax rate of 3.75
percent that appears to be consistent with what you have here so if you look
at the analysis the changes in the mansion tax rate in 2019 made it much
more progressive the higher the purchase price the higher the tax you'll have to
pay as a buyer. Now fortunately the mansion tax is a one-time tax. It's a
closing cost as opposed to a recurring tax so in that sense it is not the worst
thing that could have happened to overall taxation if you were thinking
about buying a property that was subject to the mansion tax when this legislation
was being discussed. There was a conversation about there potentially
being a pietà tare tax a recurring tax based on you know presumably annual
ownership so that would have been much more costly and sort of you know
dissuasive to buyers looking to purchase in the city compared to a one-time tax
which is what happened with the mansion tax changes a couple of other notes here
In terms of property type, we can change the property type to coop 1 2 3 family
house and you'll see that it doesn't really have any impact on the mansion
tax itself. The mansion tax however does not apply for the property types which
are say a residential property with 4 or more units so if it's a townhouse with 4
apartments you would not have to pay the mansion tax
Similarly with commercial real estate again there is no mansion tax. However,
for for more family houses in commercial real estate there are higher seller
transfer taxes on those depending on the price point so that is something for you
to keep in mind as well so going back to the calculator we pick a more normal
sale price here in the city. Let's say it's 1.5 million we have our mansion tax
of 1% and it also shows here that transfer taxes now just to reiterate
these taxes are paid by the seller so the seller is gonna pay 20 sit around
27,000 here for this deal 1.8 to 5% and the buyer is paying 1% we like to say
that the total taxes consists of both dimension tax and the transfer tax
because they're all payable at closing the only thing that is meaningful is
that the seller pays some of those and the buyer pays the mansion tax component
as well. In terms of general and analysis here we would say that the mansion tax
is a pretty large closing cost. If you're thinking about what are your total buyer
closing costs there is a separate calculator for that on the house's site
right here on the drop down so if we open that really quick we're gonna take
a look and try to figure out how big the mansion tax is as a percentage of the
other closing costs you would have as a buyer so extending our example of a 1.5
million dollar condo let us assume that we are financing eighty percent and if
you look here as far as total closing costs as a buyer you're at three point
seven percent, of course one percent of that is the mansion tax and the
remainder of the closing costs are largely driven by two other items the
mortgage recording tax which is pretty large as well as title insurance. Now if
you're if you're not financing your closing cost, should go down because
there is no mortgage according tax so if we toggle this you go down from three
point seven percent to one point eight percent on average so that's pretty much
the summary. In regard to the mansion tax calculator you can reduce the mansion
tax or partially or fully offset it by requesting a house and buyer closing
credit. Feel free to check out the house of website to learn more about that
right here on the drop down buyer closing credit. If you have any other
questions about closing costs, about the calculators leave us a comment below the
video and if you have any other ideas about tutorials other calculators we can
create let us know good luck out there!