I consider New York to be one of the best places in the world to live. The State and City offer more opportunity in education and the arts than any other State I can think of.
Avoid Paying the Mansion Tax
But greatness comes at a cost. Whether you are searching for Westchester Real Estate, an apartment in the City or a sprawling estate up north, high taxes are a reality. However, one of the most egregious taxes that buyers face, the Mansion Tax, can be avoided if you structure your deal correctly.
The Mansion tax is a 1% levy, payable by the buyer at closing, that is charged on every property, regardless of size, that sells in New York for a purchase price of 1 million dollars or more. So, what options do you have to avoid it?
- 1) The most obvious…purchase a property for $999,999 or less. If you do so, you won’t pay the mansion tax.
- 2) For deals slightly above 1 million dollars, you can get creative.
A. BROKERAGE FEE: The buyer can pay the brokerage fee. On a home that has an agreed upon price around $1.060m, if the buyer agrees to pay the fee instead of the seller who traditionally pays it, the contract price can move down to $999k, but the seller still receives the 1.06m.
B. A RIDER: Let’s say the agreed upon price is $1.2m and the seller has some furniture or other non-typical fixtures you might want to keep (TV’s, Electronics, Art, etc.). In those cases, a good attorney can make the purchase $999k and apply a rider for $200k.
IN BOTH CASES ABOVE, BUYERS SHOULD CONSULT WITH AN ATTORNEY AS TO WHETHER THE ARRANGEMENTS WOULD COUNT AS “ADDITIONAL CONSIDERATION” WHICH COULD POTENTIALLY ALTER THE TRANSFER TAXES DUE.
3) Here is the easiest and the best way to avoid paying the mansion tax and the price of the home doesn’t matter. Find an agent that offers a Brokers Commission Rebate for 1%. Very few agents or discount brokers in Westchester offer this service. For example, let’s say you find a house to buy for 2 million dollars. The broker, at the closing, will give you a rebate check for $20k, the entire amount of the mansion tax. That’s right…have your broker pay for it! And the best part…it’s not taxable!
At NestEdge Realty we stand with home buyers and believe they should be fairly treated. That’s why we offer broker commission rebates. It can be as high as 2%. Learn more about our rebates here.
Get in touch with us today via email firstname.lastname@example.org or give us a call at 914-502-4974.