Does NYC Charge a Mansion Tax on a Co-op? Rates and Who Pays

Yes, New York charges the mansion tax on a co-op: a buyer who pays $1,000,000 or more for the shares of a co-op apartment owes it, starting at 1% of the whole price and rising to 3.9% at $25,000,000 and above in NYC. The state's definition of residential real property for this tax lists a cooperative apartment unit next to houses and condos, so buying shares and a proprietary lease instead of a deed does not change the answer. The buyer pays it at closing.

When I price a co-op that sits near $1,000,000, $2,000,000 or $3,000,000, the first figure I work out is the buyer's all-in cost, the price plus the tax, because that is the number buyers compare when they decide how high to go. Below: how a co-op's price is measured, the cost at each tier, and what it means for a seller near a line. For the full rate history, read the complete NYC mansion tax guide.

Why the tax reaches co-op shares

A co-op buyer technically buys stock in a cooperative housing corporation plus a proprietary lease, not real estate. New York Tax Law section 1402-a reaches that purchase anyway. The state's Publication 577 names a cooperative apartment unit in its definition of residential real property, and the tax department's definition of consideration carries specific rules for sales of co-op stock. The grantee, meaning the buyer, is liable for the tax. If the buyer fails to pay or is exempt, the duty shifts to the seller.

Co-ops and condos differ on board approval and financing (see condo vs co-op for high-net-worth buyers), but on a resale they land in the same brackets at the same price.

The NYC rates, applied to the whole price

In New York City two state taxes stack on the buyer. The first is the 1% additional tax on residential purchases of $1,000,000 or more. The second is a supplemental tax on NYC residential purchases of $2,000,000 or more, in effect since July 1, 2019, which runs from 0.25% to 2.9%. Together they produce the combined rates below. Each rate is multiplied by the entire price, not only the part above the threshold.

What counts as the price of a co-op

The tax runs on consideration, which on a co-op resale is what the buyer pays for the shares. The state adds a proportionate share of the unpaid principal on the building's own mortgage, usually called the underlying mortgage, in two cases only: the original sale of shares by the co-op corporation or the sponsor, and a later sale of a co-op unit that is not an individual residential unit. A resale of an individual co-op apartment fits neither case, so the building's mortgage is not added to your price.

The sponsor case matters if you are buying unsold shares from a sponsor. The instructions to Form TP-584-NYC compute the added amount by multiplying the building's total unpaid mortgage principal by the unit's shares, divided by all outstanding shares. In a building with a large underlying mortgage, that addition can push a sponsor unit priced just under a line over it. Ask for the mortgage balance and the unit's share count before you bid.

Two other rules change the number. If the buyer agrees to pay a debt the seller owes as a condition of the sale, the state counts it as added price; Publication 577 uses a buyer paying the seller's brokerage fee as its example. And if the seller agrees to pay the buyer's tax, the taxed price is not reduced by that payment.

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The threshold effect: $999,999 vs $1,000,000

Because the rate applies to the whole price, one dollar can change the bill by thousands. Figures below are rounded to the dollar.

One extra dollar of price raises the buyer's cost by about $10,001 at $1,000,000, $5,001 at $2,000,000 and $7,501 at $3,000,000.

How it shows up at closing

The buyer's attorney collects the tax with the other closing funds; the law requires it to be paid at the same time and in the same manner as the transfer tax. It is reported on Form TP-584-NYC, the state's transfer tax return for New York City property, due no later than 15 days after the transfer documents are delivered. The city's own transfer tax return is prepared online in ACRIS, the city register's system, with a separate summary return for co-op transfers, and is due within 30 days. Plan to pay the tax from cash, alongside the items in this NYC closing costs breakdown.

What the seller pays instead

The mansion tax is the buyer's cost. On a resale, the seller pays the two transfer taxes. New York City's real property transfer tax on an individual co-op apartment is 1% up to $500,000 and 1.425% above it. New York State's transfer tax is 0.4%, rising to 0.65% on NYC residential sales of $3,000,000 or more. Both apply to the whole price. Our NYC transfer tax guide breaks down who pays what.

Pricing a co-op near $1M, $2M or $3M

Buyers who know the table often cap their offers just under a line. For a seller, that makes the first few thousand dollars above a threshold the hardest money to collect. At $1,005,000, you gross $5,001 more than at $999,999, while the buyer spends $15,051 more once the tax is added. That gap is what a buyer weighs.

The practical test: list either under the line, or far enough above it that closed sales in your building support the higher number. Near $3,000,000 the math is stricter, because your own transfer tax rises at the same point. The mansion tax on a co-op is the buyer's bill, but it shapes your price, and the co-op board process for sellers adds weeks to whichever deal you accept.

Common questions

Is the mansion tax on a co-op different from a condo?

On a resale, no: same rates, same thresholds, measured on the price. The difference is the sponsor sale, where a co-op buyer's taxed price includes a share of the building's underlying mortgage.

Can the seller agree to pay it?

The contract can say so, but the law makes it the buyer's tax, and a seller's payment does not lower the taxed price. If the buyer fails to pay, the seller becomes liable too.

Does my share loan cover the mansion tax on a co-op?

Plan on paying it from cash at closing. It is a closing cost on top of your down payment, not part of the purchase price your lender finances.

This is general information, not legal or tax advice. Mansion tax rules are from NY Tax Law section 1402-a, NYS Publication 577 and the Form TP-584-NYC instructions; transfer tax rates are from the NYC Department of Finance and the NYS Department of Taxation and Finance. Confirm your figures with your attorney before contract.