- New York lawmakers are planning a 1% tax on all-cash home purchases over $1 million in New York City, paid by the buyer, expected to raise $160 million toward closing the city’s budget deficit.
- Lawmakers are also considering expanding the levy to all-cash purchases over $1 million statewide, including suburbs and upstate.
- All-cash deals made up more than 60% of NYC’s ~18,000 home transactions in the first half of 2025; in Manhattan, 9 out of 10 purchases over $3 million were all-cash.
- Real estate experts warn buyers will find mortgage workarounds to avoid the tax, potentially making collections “nominal” — and industry groups say NYC residents are already the most heavily taxed in the country.
What Happened?
New York state lawmakers are finalizing a new 1% tax on all-cash residential purchases above $1 million in New York City as part of the FY 2027 budget, according to people familiar with the negotiations. Mayor Zohran Mamdani supports the measure, which he proposed as one of several revenue options. Governor Hochul’s office confirmed a general budget agreement is in place, with final bill details to follow. The city-level tax is projected to raise $160 million. A parallel proposal would extend the cash-purchase levy to all-cash transactions above $1 million statewide. The new tax comes on top of a separate second-home surcharge: properties assessed at market value between $1M–$3M face a 4% tax; $3M–$5M pay 5.25%; above $5M pay 6.5%.
Why It Matters?
All-cash transactions now dominate New York City’s luxury market — accounting for over 60% of transactions citywide and 90% of Manhattan deals above $3 million — making them a logical fiscal target. Manhattan’s cash purchases above $1 million totaled $17.4 billion last year alone. The tax reflects the city’s growing fiscal pressure: Mamdani’s $124.7 billion budget plan depends on new state aid and a series of wealth-targeted levies to close the gap. But real estate analysts are skeptical of the revenue projections. Jonathan Miller of StreetMatrix estimates that 75% of home transactions over $1 million are currently all-cash, and warns that buyers will quickly engineer mortgage structures to avoid the new levy — potentially rendering tax collections far below the $160 million target.
What’s Next?
The tax is expected to be included in the final state budget, with Assembly Speaker Heastie confirming it is “part of the plan.” The Real Estate Board of New York is pushing back hard, arguing the tax will further burden buyers and sellers while threatening existing revenue streams. The effectiveness of the measure will hinge on how aggressively buyers shift to mortgage financing — and whether Albany closes any loopholes. For the luxury real estate market, the new tax adds to an already heavy burden of transfer taxes, mansion taxes, and now second-home surcharges, potentially nudging high-end buyers toward competing markets like Florida and Texas.
Source: Bloomberg
