Pricing Near One Million on Long Island? The Mansion Tax Cliff Changes Buyer Math
If your Long Island home is priced close to one million dollars, a New York State tax that your buyer pays can still shape who shows up to your open house.
Here is the plain rule. New York State charges an extra 1 percent tax, on top of the regular transfer tax, on any residential sale of 1 million dollars or more, and the buyer pays it, not the seller. That tax applies to the whole price, not just the amount over the line, so a jump from 999,999 dollars to 1,000,000 dollars adds a real cost for the buyer, even though your proceeds barely move.
This tax has been in place since 1989 and nothing changed it this year. A proposal to lower the threshold to 500,000 dollars and shift the tax to sellers did not pass, and Governor Hochul signed the FY2027 budget without those changes on May 28, 2026. So if you are listing now, the rule you grew up hearing about is still the rule.
What the tax actually costs a buyer
The rate starts at 1 percent for homes between 1 million and 2 million dollars, which means a buyer closing at exactly 1 million dollars owes an extra 10,000 dollars they would not owe at 999,999 dollars. That is not a typo and it is not negotiable once the price crosses the line. The tax is computed on the full purchase price, not just the portion above the threshold, which is why the jump at the line feels so sharp.
This matters for a seller because the mansion tax is baked into what a buyer is actually willing to offer. A buyer comparing a home listed at 1,010,000 dollars against one at 989,000 dollars is not just comparing your price. They are comparing your price plus a 10,000 dollar tax bill that only shows up on one of those two homes.
Why this shapes how you price, not just what you net
Sellers near the line sometimes assume the tax is a buyer problem and leave it alone. In practice it narrows your buyer pool right at the threshold, because some buyers who could comfortably pay 999,000 dollars will balk at anything that trips the extra 1 percent. That is worth a conversation before you set your list price, not after an offer comes in lower than you expected.
This is separate from the regular New York State transfer tax, which applies to every sale regardless of price and is paid by the seller. Your net sheet is the place to see both numbers side by side, what the buyer's mansion tax exposure looks like at your price point and what you will actually walk away with after your own transfer tax and other costs.
What to do before you set a number
If your home is likely to land anywhere between 950,000 and 1,050,000 dollars, run both scenarios. Price it at 995,000 and you keep the full pool of buyers who want to avoid the extra tax entirely. Price it at 1,025,000 and you are asking a smaller pool of buyers to absorb a cost that has nothing to do with your home's condition or your reason for selling.
Neither choice is automatically right. It depends on your timeline, your comparable sales, and how firm your number needs to be. A buyer's agent will usually flag this before they ever write an offer, so it helps to have already thought it through.
If you want a second set of eyes on where your home lands relative to that line, check your home value or send us the details at /askmuds.