A mansion tax is an extra real estate transfer tax that a state or city charges when a property sells above a set price threshold. It has nothing to do with square footage or architecture. A modest condo that sells for $1 million in New York triggers the same mansion tax as a sprawling estate at the same price. Thresholds around the country range from $1 million to more than $5 million, and rates run from 1% to 5.5% or higher.
How the Tax Is Calculated and Who Pays
A mansion tax sits on top of whatever standard transfer taxes a jurisdiction already charges. Once a sale crosses the threshold, the tax is figured either on the full sale price or on the portion within each bracket, depending on local rules. That distinction matters.
New York uses the full-price approach at the state level. The base mansion tax is 1% of the entire sale price the moment a residential property hits $1 million. A home selling for $999,999 owes nothing; one selling for $1,000,000 owes $10,000. That cliff is why buyers close to the threshold sometimes negotiate the price just under it.
Other jurisdictions use graduated brackets, more like income tax, where each slice of the sale price is taxed at a higher rate. Washington State’s real estate excise tax charges 1.10% on the first $525,000, 1.28% on the portion up to $1,525,000, 2.75% on the portion up to $3,025,000, and 3.00% on anything above that.1Washington Department of Revenue. Real Estate Excise Tax On a $4 million sale, the effective rate is a blend of all four tiers rather than a flat 3%.
Payment happens at closing. The buyer’s attorney or the title company collects the tax with the rest of the closing costs and remits it to the taxing authority. In most jurisdictions the buyer pays, though who bears the cost can be negotiated as part of the deal.
Where Mansion Taxes Apply
There is no federal mansion tax. These are state and local taxes. As of early 2026, at least seven states plus the District of Columbia levy a surcharge on high-value property transfers or use a progressive bracket structure, and dozens of cities and counties have added their own versions. The specifics vary widely.
New York
New York has the best-known mansion tax in the country. Statewide, any residential property selling for $1 million or more triggers a 1% tax on the full sale price, paid by the buyer. In New York City, properties at $2 million or more face an additional supplemental tax with incremental rates ranging from 0.25% to 2.9% based on the purchase price.2Department of Taxation and Finance. Real Estate Transfer Tax A buyer closing on a $3 million Manhattan apartment could owe the 1% base mansion tax ($30,000) plus the supplemental tax on top.
Los Angeles
Los Angeles voters approved Measure ULA in November 2022, creating one of the steepest mansion taxes in the country. For transactions closing after June 30, 2025, the tax applies at 4% on sales above $5,300,000 and 5.5% on sales of $10,600,000 or more, with thresholds adjusted periodically.3Los Angeles Office of Finance. Real Property Transfer Tax and Measure ULA FAQ On a $12 million property, the 5.5% rate produces a $660,000 tax bill.
New Jersey
New Jersey uses a graduated realty transfer fee. When the total sale price exceeds $1,000,000, the buyer must also remit an additional 1% fee on top of the standard transfer fee structure.4NJ Division of Taxation. Realty Transfer Fee The rule applies whether the transaction involves a deed or a transfer of a controlling interest in an entity that owns classified real property.
Other States
Connecticut, Hawaii, Rhode Island, and Vermont also charge higher transfer tax rates on expensive properties. Connecticut charges 1.50% on the portion of a residential sale above $800,000, compared to 1.00% on the first $800,000. Hawaii’s conveyance tax uses a multi-tier system where rates climb to 1.25% for residential properties selling at $10 million or above. Thresholds and rates differ by state, but the principle is the same: the more expensive the property, the higher the transfer tax rate.
Common Exemptions
Not every high-value transfer triggers a mansion tax. Most jurisdictions carve out exemptions, and they can save real money.
New York’s list is representative. Transfers involving government entities on either side are exempt, including conveyances to or from the United States, New York State, and their agencies or political subdivisions. Bona fide gifts made without consideration are excluded, as are deeds used to secure a debt, transfers made in bankruptcy, and conveyances that simply change the form of ownership without changing who benefits from it.5New York State Senate. New York Tax Law TAX 1405 The state also added an exemption for conveyances to nonprofit conservation or historic preservation organizations.2Department of Taxation and Finance. Real Estate Transfer Tax
In Los Angeles, Measure ULA exempts qualified affordable housing developers and operators, administered by the Los Angeles Housing Department. Nonprofits with assets under $1 billion and government agencies may also qualify for exemptions administered by the city’s Office of Finance.6City of Los Angeles. ULA Exemptions
Across jurisdictions the pattern is similar. Government transfers, gifts, corrections to prior deeds, and restructurings that don’t change beneficial ownership tend to be carved out, and affordable housing transactions often get preferential treatment. If your transaction might qualify, check the specific rules where the property sits before closing.
Is a Mansion Tax Deductible on Your Federal Return?
No. A mansion tax is a transfer tax, and transfer taxes are not deductible on your federal income tax return. The IRS lists transfer taxes, including stamp taxes on the sale of property, among items you cannot deduct as real estate taxes on Schedule A.7Internal Revenue Service. Topic No. 503, Deductible Taxes This surprises buyers who assumed a six-figure tax at closing would produce a matching deduction.
What you can do is add the tax to your property’s cost basis. IRS Publication 551 lists transfer taxes among the settlement fees and closing costs you can include when calculating basis.8Internal Revenue Service. Publication 551 (12/2025), Basis of Assets A higher basis means less taxable gain when you eventually sell. A $100,000 mansion tax paid at closing is added to what you paid for the home, reducing your reported profit on the eventual sale. The benefit is deferred, but on a high-value property it can be substantial.
Buying or Selling Near a Threshold
Prices around a mansion tax threshold behave differently than prices well above or below it. In the twelve months after Measure ULA took effect in April 2023, single-family home sales above $5 million in Los Angeles dropped roughly 68% compared with the prior year, while nearby cities not subject to the tax saw much smaller declines. Some sellers pulled properties off the market rather than absorb the tax; others explored deal structures aimed at staying below the cutoff.
Buyers and sellers near a threshold have strong incentives to restructure transactions, and a property priced just above the line can be harder to sell than one priced well above it. If your deal is anywhere close to a mansion tax threshold, the tax itself becomes part of the negotiation alongside the sale price.