*We do not give any tax advice or recommendations. Always consult with your accountant and tax professional.
Q1: What is the “Mansion Tax” in New York?
A: The mansion tax was originally invented to tax the “rich” on any real estate purchase above $982,000. Due to the high Real Estate prices in the city, this tax hits the middle class as well. It is 1% of the purchase price and it is due at closing.
Q2: What is the “transfer tax”?
A: The transfer tax is a tax that applies to sponsor and resale condominiums. There is no law on who has to pay it, but generally the buyer has to pay it on any sponsor unit purchase and the seller has to pay it on a resale. This is negotiable though. The tax is 1.825% of the purchase price.
Q3: Do I have to pay tax on my monthly rent income?
A: The passive income generated through rents is considered general passive income and tax has to be paid on it. However, expenses related to the real estate investment can be deductible.
Q4: How is the Real Estate tax for my own Condo Apartment calculated?
A: The tax assessor will continuously reevaluate the tax. The tax will change over time and the exact amount cannot be determined in advance.
Q5: What is a tax abatement?
A: The incentive of a tax abatement was created to promote the purchase of a new development. The topic is highly complex. Generally, a 10, 15, 20 or 25 year abatement can be issued. Most common in NY is the 15 year abatement which comes with a steady tax increase over the last 5 years of the abatement of 5% until 100% are reached.