Manhattan Mansion Tax Thresholds in 2026: What Buyers Need
August 6, 2026
August 6, 2026
The portals will show you a median. In Q2 2026 that number was $1.25 million, a record for Manhattan condos and co-ops and the sixth consecutive quarterly gain. What the portals will not show you is the shape of the price distribution around it, which is not a smooth curve but a staircase with several very expensive steps.
Two of those steps changed this year. The first is the mansion tax, which has been misread for so long that most buyers still treat it as a rounding error. The second is brand new: a recurring annual surcharge on non-primary residences that took effect on July 1, 2026. For a cross-border buyer or a pied-à-terre purchaser, the two cliffs now compound. Reading Manhattan in 2026 without pricing them in is reading the wrong market.
The mansion tax is not marginal. The rate that applies to your tier applies to the entire purchase price, which is why the difference between $999,999 and $1,000,000 is a tax bill of $10,000, and the difference between $2,999,999 and $3,000,001 is roughly $7,500 more than the price change itself. The 2019 rate schedule remains in force after the state legislature's 2026 push to raise rates was dropped from the final budget agreement.
The share of Manhattan buyers this touches is no longer a minority. In Q2 2026, 57.9% of all closed sales cleared the $1 million mansion tax threshold, the highest share on record. The line was set in 1989 and has never been indexed to inflation; adjusted, it would sit somewhere around $2.5 to $2.7 million today. What was designed as a wealth tax now lands on the median one-bedroom.
| Threshold | Rate on entire price | Jump at the line |
|---|---|---|
| $1,000,000 | 1.00% | $10,000 |
| $2,000,000 | 1.25% | $5,000 |
| $3,000,000 | 1.50% | $7,500 |
| $5,000,000 | 2.25% | $37,500 |
| $10,000,000 | 3.25% | $100,000 |
| $25,000,000 | 3.90% | $162,500 |
The listing distribution reflects this. On one Manhattan search platform, apartments priced between $999,000 and $999,999 outnumber apartments priced between $1,000,000 and $1,001,000 by roughly ten to one. The $999,999 asking price is not a coincidence. It is the market pricing the cliff.
The Miller Samuel report for Q2 2026 shows a market that is narrower at the top and stronger where scarcity meets capital. Luxury listings fell to 796, the lowest in 22 years of tracking. Average days on market stretched to 95, up 21.8% year over year, while the market share of bidding wars rose to 11.9% from 7.1% a year earlier. Deals took longer and closed harder at the same time, which is the signature of a market where inventory rather than demand is the binding constraint.
Trophy activity concentrated in a handful of buildings. Q1 closings at 1122 Madison Avenue, the Robert A.M. Stern tower, ran around $5,439 per square foot with 18 of 26 units under contract; contracts at the 175 Fifth Avenue Flatiron conversion reached $30.5 million; 70 Vestry recorded a reported $57 million penthouse sale. New sales launched at 262 Fifth Avenue, a 52-story Meganom-designed tower in Nomad with 26 full-floor and duplex residences. The mid-market read is different. Corcoran's February 2026 data showed contracts under $1 million down 16% year over year, while the $2 million to $3 million band was up 20%.
The market is not one market. It is a distribution with cliffs in it, and buyers who read the cliffs correctly are the ones setting prices right now.
The pied-à-terre surcharge, codified as Tax Law Article 30-C and signed on May 28, 2026, took effect on July 1 and runs through 2031. It applies an annual surcharge of 4% to 6.5% to non-primary condos and co-ops valued at $1 million or more, and to one-to-three family homes valued at $5 million or more. Owner-occupied primary homes are exempt. So are unsold sponsor units and units without a certificate of occupancy. Full-year rentals to a tenant are also outside the surcharge.
For a domestic primary buyer, this changes nothing. For an international buyer using a Manhattan apartment as a secondary residence, or for a domestic buyer keeping the city apartment while primary residence is elsewhere, it changes the entire holding math. A $5.5 million non-primary Long Island City condo now pays a one-time 2.25% mansion tax at closing and then a recurring annual pied-à-terre bill for every subsequent year of ownership. That recurring line item, capitalized against yield or against personal cash flow, is a materially different asset than the same apartment was in June.
Cross-border buyers should read three details carefully. The surcharge applies inside the five boroughs only. It attaches to properties, not to residency status, which means the primary-residence test is what governs, not passport. And it stacks with existing NYC property tax bills, so the total annual carry needs to be modeled at the surcharge rate, not the base rate.
Manhattan co-op median sale price reached $895,000 in Q2 2026, up 8.5% year over year, while condo medians rose 2.9% and new-development condos rose 7.6%. Brokers have framed this as a value story, and it partly is. The Q1 2026 median spread between condos and $1.75 million and co-ops at $850,000 is one of the widest gaps in recent memory.
It is also a threshold story. A co-op transacting at $895,000 sits below the $1 million mansion tax line entirely. A comparable condo at $1.05 million crosses it, and the buyer writes a $10,500 check at closing on top of the price difference. The mansion tax base for co-ops is not just the share price; it includes the buyer's proportional share of the building's underlying mortgage, which is a detail attorneys catch and calculators often miss. Buyers who model this carefully still find that mid-market co-ops clear the tax math more cleanly than mid-market condos, and the Q2 numbers reflect it.
Carrying costs cut the other way. Miller Samuel's Q2 read put average monthly co-op maintenance at $3,077, up 10.2% year over year, against average condo common charges plus taxes of $4,466. The gap has narrowed, and it narrows further in prewar co-ops with rising insurance and utility costs. For buyers doing the full ten-year hold math, the closing-day tax advantage of a co-op has to be weighed against a maintenance line that is compounding faster than inflation.
The threshold math is not a reason to avoid Manhattan. It is a reason to write offers that acknowledge where the lines sit.
Does the mansion tax apply to co-ops as well as condos? Yes. It applies to any residential purchase at or above $1 million, including co-op apartments, and the taxable base for a co-op includes the buyer's proportional share of the building's underlying mortgage.
Was the mansion tax rate increased in the 2026 budget? No. The rate hikes proposed by the State Senate and Assembly earlier in 2026 were dropped from the final budget. The 2019 schedule remains in effect.
How does the pied-à-terre surcharge interact with rental use? Units rented to a full-time tenant for at least one year are exempt from the surcharge, as are owner-occupied primary residences and unsold sponsor units.
Is the mansion tax deductible? It is generally added to the buyer's cost basis, which reduces capital gain at future sale rather than producing a current-year deduction. Confirm treatment with a tax advisor for a specific situation.
If you are underwriting a Manhattan purchase in the second half of 2026, the thresholds deserve their own line in the model, not a footnote. The Globalist Group works through the mansion tax math, the pied-à-terre exposure, and the co-op versus condo carry with buyers who want the numbers before the tour, not after. Work With Us.
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