Buying or selling on the Upper East Side comes with world-class addresses and world-class paperwork. The biggest surprise for many clients is how state and city transfer taxes stack up at closing. If you get the numbers wrong, your cash-to-close can jump by tens of thousands. In this guide, you’ll learn what the mansion tax is, how New York City’s transfer tax works, how co-ops differ from condos, and what to expect so you can budget with confidence. Let’s dive in.
Mansion tax basics
The New York State “mansion tax” is a state-level charge that applies when a residential purchase price reaches $1,000,000 or more. It is separate from other transfer taxes and from lender or title costs. In typical practice, the buyer pays this tax at closing unless the contract says otherwise. Always confirm current rules with the New York State Department of Taxation and Finance.
When it applies
If the contract price meets or exceeds $1,000,000, expect the state mansion tax to apply. This is true for both co-op and condo purchases on the Upper East Side. It is a one-time charge tied to the sale price. Because laws can change, check current thresholds and any graduated tiers with the state before you finalize numbers.
Who pays and when
Buyers generally pay this tax at closing. It appears as a line item on the closing statement and is remitted with other documents. In rare cases, parties negotiate a different arrangement, but the common expectation is buyer-paid. Your attorney will confirm how it is handled in your contract.
How to estimate
A familiar reference point has been 1 percent of the purchase price at the threshold level, but final amounts can vary based on law. Treat any quick estimate as a placeholder and get an exact figure from your attorney and the Tax Department’s guidance before you sign.
NYC Real Property Transfer Tax (RPTT)
New York City also charges a Real Property Transfer Tax on many transfers within the five boroughs. This is separate from the state mansion tax. Rates depend on whether the property is residential and on the price level. You or your attorney pay it to the city at recording. For current procedures and rate tables, start with the NYC Department of Finance.
How the RPTT works
For condos, the RPTT typically applies to the deed transfer. For co-ops, the city can treat the share and proprietary lease transfer as a taxable event. Exact treatment is technical and depends on the structure of the transaction. Your attorney and the city’s guidance will provide the precise calculation.
Who usually pays
In practice, buyers often pay the RPTT, especially in competitive deals. That said, responsibility can be negotiated in the contract. Some sellers or sponsors offer to cover part or all of the tax as a concession. Confirm the allocation in writing before you go to contract.
Co-op vs. condo
The city calculates transfer tax based on the legal nature of the transfer. Condos involve a deed. Co-ops involve a transfer of shares and a proprietary lease. Both can trigger city transfer tax, but the process and paperwork differ. Your closing team will align the filing to the correct category using the city forms and instructions from the Department of Finance.
Mortgage recording tax and other fees
If you finance a condo purchase, the mortgage is recorded against real property. That recording can trigger a mortgage recording tax in New York City. The amount depends on the loan size and current schedules. If you buy a co-op with a share loan, you typically do not record a real property mortgage, so this tax often does not apply. For current guidance, consult the NYC Department of Finance.
Other items may appear on your statement:
- Recording and filing fees for deeds, UCC filings, and related documents.
- Title insurance for condos, which can be a significant number at higher prices.
- Co-op and condo administrative charges, move-in or move-out fees, and application fees.
- Lender charges, appraisal fees, and attorney fees.
Co-op specifics on the Upper East Side
Many Upper East Side buildings are co-ops, especially pre-war residences. Co-ops have unique rules that affect costs and timing.
- Flip tax: Some co-ops charge a flip tax set out in the proprietary lease or house rules. The building decides whether the buyer, seller, or both pay it. Confirm the building’s documents or ask the managing agent.
- Board process: Co-ops require a board package and approval before closing. Expect application fees and processing costs that are separate from taxes.
- Share loans: Financing is structured as a loan secured by shares, not a recorded real property mortgage. This is why the mortgage recording tax typically does not apply to co-ops.
Who pays what in practice
Here is how responsibility is usually handled, subject to negotiation and building rules:
- Mansion tax: Commonly paid by the buyer at closing.
- NYC RPTT: Often paid by the buyer, but negotiable. Some sellers or sponsors offer credits.
- Mortgage recording tax: Paid by the borrower when a mortgage is recorded, usually on condos.
- Flip tax: As set by the co-op’s governing documents, sometimes paid by seller, buyer, or split.
- Legal, lender, and title costs: Usually buyer costs. Sellers pay broker commissions and certain prorations.
Always confirm these allocations in your contract of sale. Your attorney will finalize who pays each line item.
Budgeting examples
These examples are illustrative to help you plan. Confirm exact rates and totals with your attorney and the city and state agencies before you close.
Condo purchase example
Assume you buy a UES condo for $3,500,000 and you finance the purchase. You should plan for the following buckets:
- NYS mansion tax: Using a simple 1 percent illustration, this would be $35,000. The actual calculation depends on current law.
- NYC Real Property Transfer Tax: City transfer tax applies to many condo transfers. The amount depends on current rate tables and thresholds.
- Mortgage recording tax: Applies to recorded mortgages. The total varies with loan size and current schedules.
- Title insurance: Premiums scale with price and can be significant at the luxury level.
- Other costs: Legal fees, lender fees, recording fees, and condo administrative charges.
Co-op purchase example
Assume you buy a UES co-op for $2,200,000 using a share loan. Plan for:
- NYS mansion tax: Using a 1 percent illustration, this would be $22,000. Confirm the current rate.
- NYC Real Property Transfer Tax: May apply to co-op resales depending on structure and city rules.
- Mortgage recording tax: Likely not applicable if no real property mortgage is recorded.
- Flip tax: Check the proprietary lease or offering plan to see whether a flip tax applies and who pays it.
- Board and application fees: Expect processing costs set by the building.
For authoritative references, consult the NYC Department of Finance for transfer tax and mortgage recording procedures and the New York State Department of Taxation and Finance for state mansion tax rules.
Timing and cash-to-close
Mansion tax and city transfer tax are typically due at or before closing. Lenders often require proof of payment or escrow holds for these items. Co-op board approvals can extend timelines, which can shift when funds are needed. Make sure your liquid cash covers taxes, closing costs, and any prorations in addition to your down payment.
Smart steps before you make an offer
Take these actions early so you are never surprised at the closing table:
- Ask whether the building charges a flip tax or special transfer fees. Request the relevant pages from the offering plan or proprietary lease.
- Ask whether the seller will contribute toward transfer taxes or closing costs. Get any concessions in writing.
- If you plan to finance, ask your lender for a preliminary estimate that includes a mortgage recording tax estimate and lender fees.
What to confirm during contract
When you move into contract, clarity is your best friend. Confirm the following in writing:
- Who pays the state mansion tax and the city transfer tax.
- Whether a flip tax applies to the co-op and who will pay it.
- A projected closing statement that lists all taxes and fees so you can confirm cash-to-close.
Final checks before closing
Do a last review with your attorney and lender to avoid delays:
- Verify current tax rates and procedures with the NYC Department of Finance and the New York State Department of Taxation and Finance.
- Confirm that your available funds cover all taxes due at closing and any escrows your lender requires.
- For co-ops, confirm that board approval is complete and building fees are scheduled.
Work with a trusted UES advisor
Luxury transactions on the Upper East Side often involve co-op rules, complex closing statements, and multiple taxes. With the right guidance, you can anticipate costs, negotiate smartly, and close smoothly. If you are planning to buy or sell, our team can coordinate with your attorney and lender to help you budget, prepare, and position your deal for success. Connect with Lauren Mitinas-Kelly | Limitless LMK to discuss your goals in confidence.
FAQs
What is the New York State mansion tax for Upper East Side homes?
- It is a state transfer tax that applies to most residential purchases at or above $1,000,000, commonly paid by the buyer at closing; confirm current rules with the state.
Does NYC’s Real Property Transfer Tax apply to co-ops and condos?
- Yes, many transfers of real property or co-op shares within NYC are subject to the city transfer tax, with calculation rules that differ by transaction type and price.
Who typically pays the mansion tax and NYC transfer tax in Manhattan?
- Buyers commonly pay both in practice, though contracts can negotiate responsibility and some sellers or sponsors offer concessions.
Do co-op buyers pay mortgage recording tax on the Upper East Side?
- Usually no, because co-op financing uses a share loan rather than a recorded real property mortgage; confirm structure with your attorney and lender.
What is a co-op flip tax and who pays it?
- A flip tax is a building-imposed transfer fee set in the proprietary lease or house rules, paid by the seller, buyer, or split depending on the building’s policy.
How should I estimate my cash-to-close for a UES luxury purchase?
- Ask your attorney and lender for a closing statement that includes the mansion tax, NYC transfer tax, any mortgage recording tax, title costs, and building fees, and verify rates with city and state agencies.
