New York collects record 'mansion tax'

The 1 percent levy on homes sold for $1 million yielded $259 million this past fiscal year.

By MSN Real Estate partner Mar 19, 2014 6:52AM

© CorbisBy Robert Frank, CNBC

 

The boom in multimillion-dollar real estate sales in New York has plenty of critics. But there is one group that's cheering: New York politicians.

 

According to the New York state Department of Taxation and Finance, collections from the state's so-called mansion tax — a 1 percent levy on homes sold for $1 million — reached a record $259 million in the 2012-2013 fiscal year. That's up 22 percent from the previous fiscal year and up 47 percent from the market bottom in 2009-2010.

 

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Of course, $259 million is a drop in the revenue bucket because New York collected $63.6 billion in total taxes and fees in 2012-2013. But collections on the mansion tax were more than the state alcohol tax and twice the tobacco products' tax in the same year.

 

As its revenue has grown, so has its share of critics. Many argue that the mansion tax, first imposed by Gov. Mario Cuomo in 1989, should be adjusted for real estate inflation. Brokers say that a $1 million apartment in 1989 would be sold for about $1.9 million to $2 million today.

And while $1 million may get you a mansion in Binghamton or Erie, N.Y., it can barely buy a one-bedroom in Manhattan. In Manhattan, it might be time to rename it the "lavish studio apartment" tax.

 

The mansion tax is universally hated by the real estate industry.


"It's arbitrary," said Duncan MacKenzie, CEO of the New York State Association of Realtors. "And it artificially depresses the market."

It's hard to know how much the tax depresses the market — or even if it does. But a recent study by Wojciech Kopczuk and David J. Munroe of Columbia University found that the tax creates "bunching": a large grouping of homes priced just under the tax threshold.

 

A look at how much tax has been collected over time:

 


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Tags: buying
 
28Comments
Apr 6, 2014 7:23PM
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I could never afford to buy my house today with a loan and the taxes I now pay on my home in
Mpls,MN.  They just keep raising the value ever year even thou I could never sell it for that value. Detroit did the same and look at it now. 
Apr 6, 2014 6:21PM
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It is amazing that the cradle of our country, namely the Northeast, has forgotten the principles by which we founded our nation.  Sad.  Sometimes I think maybe the nation would have been better off if the South had been able to form it's own country.  The North would have self destructed by now.  And before all the trolls out there start rolling in, I'm not talking about slavery.  Everybody with one brain cell knows that is morally repugnant and is wrong, although I will remind you that the United States was not the first nor the last to have this practice, particularly in countries in their infancy..  I am speaking only to the political and economic advantages that are leveraged and maintained by a truly capitalistic/libertarian society.
Apr 6, 2014 6:10PM
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New York. New Jersey. Anything north of South Carolina. 'Nuff said.  I'd give them all to Canada.
Apr 6, 2014 3:08PM
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If you have it the government will find a way to steal it. Everyone ought to be paying FEDERAL TAX or you shouldn't get to vote. Maybe that way people would care how the politicians spend their money and who they tax.
Apr 6, 2014 2:55PM
Apr 6, 2014 12:51PM
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Stop your whining, If you can afford a million dollar home you can afford to pay the one percent tax. People seem to forget the wealthiest amongst us have scooped up most of the nations net worth [more than 50%] over the past 34 years. So don't ask me to feel sorry for them.


While tens of millions of people in this country struggle just to pay their bills, the rich pay Republican politicians huge sums of money to cut their taxes even more than the Bush tax cuts already have. Lets also not forget they pay the Republican/Tea Party to cut unemployment benefits and to eviscerate food stamp programs for the poor. These heartless P#$%^s already have way too much money but to them too much is never enough...... In my opinion their greed is a mental illness that can only be cured by taxing the living $%#@ out of them until the economic scale balances out again.


Many of these greedy people like Mitt Romney hide their ill gotten gains in off shore banks to avoid paying taxes, that way the rest of us to pick up the tax tab while they laugh all the way to the off shore bank..... Again, don't ask me to feel sorry for the greedy one percent, they don't deserve anyone's sympathy. 

Apr 6, 2014 10:15AM
Apr 6, 2014 8:42AM
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Tax base is moving south! NY and NJ will be like Michigan in a few yeas...
Apr 6, 2014 8:16AM
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The rich getting richer under Dem. rule? How could that be?
Apr 6, 2014 6:48AM
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The tax started in 1989 only on homes over $1M. Today, that is equal to a $2M home. It won't be many years until $1M is a normal, middle class home. But, the politicians won't raise the limit because it's a "tax the other guy (rich)" plan.


Be careful about what taxes you advocate the government collect; they bite all of us sooner or later.

Apr 6, 2014 4:05AM
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how come we cannot comment on the important stories? – – 100 years ago this country had just discovered taxes, if someone from that era could see what has happened with taxation I do not believe this country would be called the United States of America today. Why is it only the old people are complaining basically because they're old enough to have seen the corruption spread. These young people today do not know any better they think it's always been this way. I believe the future is very sad from my point of view. The North American Free Trade Agreement sealed their future and the political structure searches for ever new income.
Apr 6, 2014 3:19AM
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Small wonder business and the rich are leaving NY.
Mar 19, 2014 8:44AM
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I could never afford anything requiring I pay that tax, but.......I don't see where it's something to brag about. This country is so overtaxed, poor, middle, rich, all need a break. I'm tired of supporting those who won't work, also tired of supporting politicians who won't work. Enough taxes, how about a break for all. Really, think about what you are getting for you tax dollars....local, state, federal. Time to say  enough is enough.
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