A buyer purchasing a $1.5 million Manhattan condo in 2026 owes roughly $30,000 in mansion tax plus $26,250 in mortgage recording tax at closing, before they pay a single dollar of annual property tax. NYC real estate taxes are not one tax. They are at least five separate taxes a buyer or seller can owe across the lifecycle of a transaction, and missing any one of them can break a deal or trigger a five-figure surprise. I am a Licensed Real Estate Associate Broker with Keller Williams NYC, and across 25+ years and 1,000+ NYC transactions, the tax math is what I run before pricing any offer in Manhattan, Queens, or Brooklyn. This guide covers every NYC real estate tax in 2026, who pays, when, how much, and how to reduce each one.
The Five NYC Real Estate Taxes in 2026
- Property Tax: annual, ranges 10.694% to 19.573% of assessed value depending on tax class
- Mansion Tax: 1% to 3.9% on purchases of $1M and above, paid by the buyer at closing
- Transfer Tax: NYC plus NY State, roughly 1.4% to 2.075% on the sale price, paid by the seller
- Mortgage Recording Tax: 1.8% to 2.175% of the loan amount, paid by the buyer at closing
- Capital Gains Tax: federal plus NY State plus NYC on profit at sale, with Section 121 primary-residence exclusion
Two more taxes apply in specific situations: the 421-a / 485-x abatement reduces property tax on qualifying new construction for 10 to 35 years, and rent stabilization tax treatment changes how landlords compute taxable income. Both are covered below.
1. NYC Property Tax: Four Classes, Four Rates
Property tax is the recurring annual tax. NYC collected $33.7 billion in property tax in fiscal year 2026, the largest single source of city revenue. Unlike most US markets, NYC does not use one rate. It uses four classes, each with its own assessment ratio and rate cap. This is the main reason a $1.5 million Manhattan condo can carry a lower annual tax bill than a $700,000 single-family home in Queens.
The Four Property Tax Classes
NYC groups all real property into four tax classes, each with different assessment ratios and rate caps. This system is unique to New York City and is the main reason property tax here confuses newcomers.
| Tax Class | Property Types | Assessment Ratio | FY2025 Tax Rate |
|---|---|---|---|
| Class 1 | 1-3 family homes, small condos | 6% | 19.573% |
| Class 2 | Co-ops, condos, rental buildings (4+ units) | 45% | 12.267% |
| Class 3 | Utility companies | 45% | 12.289% |
| Class 4 | Commercial, office, retail | 45% | 10.694% |
Source: NYC Department of Finance, FY2025 Final Tax Rates
How NYC Property Tax Is Actually Calculated
Here is the formula: Market Value x Assessment Ratio x Tax Rate = Annual Tax. But the critical detail is that NYC's "market value" is not your apartment's sale price. The Department of Finance determines a separate assessed market value, which for Class 2 properties (co-ops and condos) is based on the building's income, not comparable sales. This is why a $1.5 million condo might have a lower tax bill than a $600,000 single-family home.
Co-op Tax Treatment
Co-op buildings are assessed as a single entity under Class 2. The building pays one tax bill, and each shareholder's portion is included in their monthly maintenance. This means co-op owners do not receive an individual tax bill. Instead, the managing agent will provide a letter each year showing your proportional share of the building's property tax, which is deductible on your federal taxes (subject to the $10,000 SALT cap). For more on co-op ownership, see my co-op vs. condo comparison.
Condo Tax Treatment
Condo owners receive their own individual tax bill. Each condo unit has its own BBL (borough, block, lot) number and is assessed independently. However, the building as a whole is still classified as Class 2, so the assessment is based on income approach, not sale price. Newer condos often benefit from 421-a tax abatements that significantly reduce the tax burden for 10-25 years.
Key Insight: The Assessment Cap Advantage
Class 1 properties (1-3 family homes) are capped at 6% assessment increases per year and 20% over five years. Class 2 properties are capped at 8% per year and 30% over five years. These caps mean that in rapidly appreciating neighborhoods, longtime owners can have dramatically lower taxes than new buyers at the same price point.
NYC Property Tax Exemptions and Abatements
STAR Program (School Tax Relief)
The Basic STAR exemption is available to homeowners with household income of $500,000 or less. Enhanced STAR is for owners 65+ with income of $98,700 or less. New applicants register through the New York State DTF rather than the city. STAR can save homeowners roughly $300-$700 per year depending on the property.
Senior Citizen Homeowner Exemption (SCHE)
Owners 65 or older with combined income under $58,399 may qualify for a 5-50% reduction in assessed value. This applies to co-ops (through the building) and condos/houses directly. The application is filed annually with NYC DOF.
Veterans Exemptions
NYC offers three levels of veterans property tax exemptions: Alternative Veterans (based on service period and combat), Eligible Funds (based on use of eligible funds to purchase), and Cold War Veterans. These can be combined with other exemptions and provide meaningful tax reductions.
Tax Abatement Programs
Abatements differ from exemptions: an abatement directly reduces the tax bill dollar-for-dollar. The most significant abatement program in NYC has been the 421-a (now replaced by 485-x), which phases in over 10-25 years on new construction. If you are buying a newer condo, always ask when the abatement expires, because the tax increase can be dramatic.
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How to Check Your NYC Property Tax Bill
The NYC Department of Finance property inquiry tool at propertyinquiry.finance.nyc.gov lets you search any property by address or BBL. You can view the current assessed value, tax class, exemptions, and actual tax bill. I recommend every buyer check this before making an offer, and every owner review it annually. If you suspect your property is over-assessed, you can file a challenge with the NYC Tax Commission before March 1 for Class 2 and March 15 for Class 1 each year. For recorded deeds, mortgages, and tax liens against a property, the companion resource is ACRIS, NYC's free property records search.
NYC Property Tax Compared to Other Markets
NYC (Manhattan Condo)
- Effective rate: ~0.8-1.2% of market value
- $1M condo: ~$8,000-$12,000/year
- Assessment based on income approach
- 421-a abatement can reduce to near zero
Westchester / Long Island
- Effective rate: ~2.0-2.8% of market value
- $1M home: ~$20,000-$28,000/year
- Assessment based on comparable sales
- No significant abatement programs
This comparison surprises many buyers considering leaving NYC. A $1 million house in Westchester may carry a property tax bill 2-3x higher than a $1 million condo in Manhattan. For buyers weighing the NYC suburbs, my Hudson Valley real estate guide covers more on suburban tax differences.
2. NYC Mansion Tax: 1% to 3.9% on $1M+ Purchases
The mansion tax is a one-time tax paid by the buyer at closing on any residential purchase of $1 million or more. NY State originally set a flat 1% in 1989. In 2019 NYC layered on a supplemental tax that scales up to 3.9% on purchases of $25 million and above. In a Manhattan market where the median sale price sits above $1.1 million, the mansion tax now applies to the majority of Manhattan closings.
| Purchase Price | Mansion Tax Rate | Tax on Top of Bracket |
|---|---|---|
| $1,000,000 to $1,999,999 | 1.00% | $10,000 to $19,999 |
| $2,000,000 to $2,999,999 | 1.25% | $25,000 to $37,499 |
| $3,000,000 to $4,999,999 | 1.50% | $45,000 to $74,999 |
| $5,000,000 to $9,999,999 | 2.25% | $112,500 to $224,999 |
| $10,000,000 to $14,999,999 | 3.25% | $325,000 to $487,499 |
| $15,000,000 to $19,999,999 | 3.50% | $525,000 to $699,999 |
| $20,000,000 to $24,999,999 | 3.75% | $750,000 to $937,499 |
| $25,000,000 and above | 3.90% | $975,000+ |
Source: NY State Department of Taxation and Finance, 2026 schedule
Example: A buyer purchasing a $1.5 million Upper West Side condo pays $15,000 in mansion tax (1.0% of $1.5M). A buyer at $2.5 million pays $31,250 (1.25%). At $5 million, the bill jumps to $112,500. The tax applies to the full purchase price, not just the amount over $1 million. There is no proration.
Who pays: the buyer, at closing, paid directly to NY State along with the deed. There is no escrow or installment option.
Strategies to reduce mansion tax: the cleanest tool is price negotiation. Closing at $999,999 saves $10,000 versus closing at $1,000,000. Buyers and sellers routinely structure purchases at $999,000 with fixtures or furniture sold separately. For a deeper breakdown of brackets and 2026 case studies, see the complete NYC mansion tax guide.
3. NYC and NY State Transfer Tax: Paid by the Seller
Transfer tax is paid by the seller on the sale price. Two layers stack: NYC's Real Property Transfer Tax (RPTT) and the NY State Real Estate Transfer Tax. Together they range from roughly 1.4% to 2.075% of the sale price.
| Tax | Sale Price Trigger | Rate |
|---|---|---|
| NYC RPTT (residential) | Under $500,000 | 1.00% |
| NYC RPTT (residential) | $500,000 and above | 1.425% |
| NY State Transfer Tax | All residential | 0.40% |
| NY State supplemental | $3,000,000 and above | 0.65% (total 1.05% state) |
Source: NYC Department of Finance and NY State Department of Taxation and Finance, 2026
Example: A seller closing on a $1.2 million Brooklyn condo pays $17,100 in NYC RPTT (1.425%) plus $4,800 in NY State transfer tax (0.40%), for a total transfer tax bill of $21,900. On a $3.5 million sale, the seller owes $49,875 in NYC RPTT plus $36,750 in state tax, $86,625 combined.
Who pays: the seller, by custom and by the contract of sale. In new development closings, the sponsor often shifts the transfer tax to the buyer in the offering plan, which can add 1.825% to the buyer's closing cost.
4. Mortgage Recording Tax: 1.8% to 2.175% of the Loan
The mortgage recording tax (MRT) is paid by the buyer on the loan amount, not the purchase price. In NYC, MRT is 1.8% for loans under $500,000 and 1.925% for residential loans of $500,000 and above. The lender pays 0.25% of that, so the effective buyer cost is 1.8% or 1.925% minus the lender's share. For commercial and multifamily over six units, the rate climbs to 2.175%.
Example: A buyer financing $1,000,000 on a $1.5 million Manhattan condo owes mortgage recording tax of $19,250 (1.925% of $1M) at closing. A buyer financing $400,000 on a $700,000 Queens co-op pays $7,200 (1.8%).
Co-op exception, this is the big one: co-op shares are personal property, not real property. There is no mortgage recording tax on co-op share loans. On a $1M co-op loan this saves the buyer $19,250 versus an identical condo purchase. I quantify this for every Keller Williams NYC client weighing co-op versus condo on the same budget, and on financed purchases it routinely tips the math toward the co-op.
CEMA, the savings tool sellers use: a Consolidation, Extension and Modification Agreement (CEMA) lets a buyer assume and extend the seller's existing mortgage instead of getting a new loan. The buyer only pays MRT on the new money, not the assumed balance. On a $1.5M purchase where the seller has a $600,000 mortgage and the buyer is borrowing $1,000,000 total, a CEMA saves the buyer roughly $11,550 in MRT. Sellers typically split the savings with the buyer in negotiation.
5. Capital Gains Tax: Federal, State, and the Section 121 Exclusion
Capital gains tax hits sellers, not buyers, and only on the profit, not the sale price. A NYC seller is exposed to three layers: federal capital gains (0%, 15%, or 20% depending on income), NY State income tax (4% to 10.9%), and NYC personal income tax (3.078% to 3.876%). Combined long-term rates for high earners in NYC can reach 35%+.
Section 121 primary-residence exclusion: federal law lets a single seller exclude up to $250,000 of gain on a primary residence, and married couples filing jointly can exclude up to $500,000. You must have owned and used the home as a primary residence for at least two of the last five years. NY State and NYC honor the federal exclusion, so the savings stack across all three layers.
Example: a married couple bought a Harlem brownstone in 2014 for $850,000 and sells in 2026 for $1,750,000. Gross gain is $900,000. After the $500,000 Section 121 exclusion, taxable gain is $400,000. At a combined federal/state/city long-term rate of roughly 28%, the tax bill is around $112,000. Without the exclusion, the same couple would owe around $252,000. The exclusion is worth $140,000 to them.
Strategies to reduce capital gains: document every capital improvement (renovations, new kitchens, primary bathroom redo) because they add to your cost basis. Time the sale so you clear the two-year ownership and use test. For investment property (not primary residence), a 1031 exchange defers federal capital gains entirely. Full breakdown in my NYC capital gains tax guide for home sellers.
Need a Tax Math Walkthrough on a Specific NYC Property?
I run the full tax stack, property, mansion, transfer, recording, and capital gains, on every offer my clients make. 25+ years and 1,000+ NYC transactions.
Schedule a Free Consultation6. 421-a and 485-x Tax Abatements: How New Construction Pays Less
The 421-a program (now closed to new entrants, replaced by 485-x in 2024) abates property tax on qualifying new residential construction. Existing 421-a buildings keep their abatement schedule. A typical 25-year 421-a abatement starts at 100% off the new-construction portion of the tax and steps down 20% every two years in the back half. New condos in Long Island City, Hudson Yards, and Williamsburg routinely carry monthly taxes 60% to 90% below comparable older buildings, for as long as the abatement runs.
Buyer trap: when the abatement expires, the tax bill resets to full assessed value. I have seen $400/month tax lines balloon to $1,800/month overnight on Long Island City closings. Always ask the listing broker for the abatement schedule out of the offering plan before bidding. The 421-a abatement guide walks through the schedules, the 485-x replacement program, and questions every buyer should ask.
7. Tax Implications for Landlords and Rent-Stabilized Owners
Owners of rental property report rental income on federal Schedule E, NY State IT-201, and NYC tax returns if they file as residents. Two NYC-specific items matter for landlords:
- Major Capital Improvement (MCI) and Individual Apartment Improvement (IAI) increases on rent-stabilized units are limited under the Housing Stability and Tenant Protection Act of 2019, which caps how much of an improvement cost a landlord can recover through rent increases. This affects taxable income because un-recoverable improvements still create depreciable basis but no offsetting rent.
- J-51 abatements reduce property tax in exchange for accepting rent stabilization on the unit. Owners considering J-51 should model the long-term tax savings against the loss of market-rate flexibility.
Depreciation on residential rental property is 27.5 years straight line for federal purposes. NY State and NYC follow the federal schedule. When the property is sold, depreciation recapture is taxed at up to 25% federal, plus state and city income tax on top.
Worked Example: Total Tax Cost of a $1.5M Manhattan Condo Purchase
| Tax | Who Pays | Amount |
|---|---|---|
| Mansion Tax (1.0%) | Buyer at closing | $15,000 |
| Mortgage Recording Tax (1.925% on $1.05M loan) | Buyer at closing | $20,213 |
| NYC RPTT (seller side, referenced in net sheet) | Seller | $21,375 |
| NY State Transfer Tax | Seller | $6,000 |
| Annual Property Tax (Class 2 condo, no abatement) | Buyer, yearly | ~$11,000/yr |
A buyer's all-in tax cost at closing on this $1.5M purchase is roughly $35,213, plus $11,000 annually thereafter. The seller's tax cost is $27,375 in transfer tax, plus capital gains on their profit. Combined with broker commissions and legal fees, see the full NYC closing costs breakdown for the complete picture.
Frequently Asked Questions About NYC Real Estate Taxes
What real estate taxes do I pay when buying in NYC?
A NYC buyer pays mortgage recording tax (1.8% to 1.925% of the loan amount), mansion tax (1% to 3.9% if the purchase is $1M or more), and ongoing annual property tax (Class 1 or Class 2 depending on unit type). On a $1.5M condo with a $1M loan, the buyer's tax cost at closing is roughly $34,250.
What real estate taxes do I pay when selling in NYC?
The seller pays NYC RPTT (1% under $500K, 1.425% at $500K+) plus NY State transfer tax (0.4%, with a 0.65% supplemental tax on sales of $3M+). Capital gains tax also applies on profit, partially offset by the Section 121 primary-residence exclusion of $250K single or $500K married.
Are NYC co-ops taxed differently from condos?
Yes. Co-ops do not generate a mortgage recording tax because the loan is secured by stock, not real estate. The building pays one Class 2 property tax bill split among shareholders through maintenance. Condos have individual tax bills and a full mortgage recording tax on the loan.
How does the NYC mansion tax work in 2026?
The mansion tax is a one-time tax paid by the buyer on residential purchases of $1M and above. It starts at 1.0% from $1M to $1,999,999 and steps up to 3.9% at $25M and above. The tax applies to the full purchase price, not just the portion above $1M.
Can I deduct NYC property tax on my federal return?
Yes, but the federal State and Local Tax (SALT) deduction is capped at $10,000 per household. Most NYC owners hit that cap quickly between state income tax and property tax, which is why the federal benefit of NYC property tax is limited compared to lower-tax states.
What is a CEMA and how much can it save?
A Consolidation, Extension and Modification Agreement lets the buyer assume the seller's existing mortgage so mortgage recording tax only applies to new money borrowed, not the assumed balance. On a $1.5M purchase with a $600K assumed mortgage and $400K of new money, a CEMA saves the buyer roughly $11,550. Sellers usually split the savings.
How do I challenge my NYC property tax assessment?
File with the NYC Tax Commission before March 1 for Class 2 (co-ops, condos, rentals) or March 15 for Class 1 (1-3 family homes). You can also use the NYC Department of Finance review process online at propertyinquiry.finance.nyc.gov before challenging formally.
Bottom Line
NYC real estate taxes are not one tax. They are five separate taxes that hit buyers and sellers at different points: mortgage recording and mansion tax at the buyer's closing, transfer tax at the seller's closing, annual property tax for the life of ownership, and capital gains at the exit. Skipping any one of them can break a deal or trigger a six-figure surprise. As a Licensed Real Estate Associate Broker with Keller Williams NYC, I model all five for every client before we set pricing strategy on either side of a deal. If you want a personalized tax walkthrough on a specific NYC property, reach out and I will run the full stack with you.
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