Increases the sales price threshold for real property conveyances that will trigger additional sales tax

BILL NUMBER:S2061A

Title of bill

An act to amend the tax law, in relation to increasing the amount on which additional taxes are imposed for conveyances of real property

Purpose

The purpose of this bill is to adjust by inflation the sale price threshold that triggers the so-called "Mansion Tax."

Summary of provisions

Section 1 amends Section 1402-a of the Tax Law by adjusting for inflation the sale price threshold for the real property transfer tax referred to as the "mansion tax" so that instead of the threshold being $1 million, it is $1 million adjusted by inflation. The inflation adjustment is based on the Consumer Price Index (CPI) and adjusts once a year based on the inflation that has occurred since the mansion tax was established.

Section 2 sets forth the effective date.

Existing law

Currently, section 1402-a of the New York State Tax Law imposes a 1% tax on buyers who purchase a one, two of three family home or an individual condominium or cooperative unit for $1 million or more. This tax, paid in addition to the regular real estate transfer tax that all real property sales are subject to is known as the "mansion tax".

Justification

The "mansion tax" today is no longer limited to taxing mansions. This additional tax was established in 1989 when the average price of a home in New York State was far less than what it is today. With the average price of homes in parts of New York State, particularly in New York City and surrounding suburban counties now exceeding $1 million, what was meant as a tax on the rich has become a tax on average homebuyers. The runaway real estate values throughout downstate New York caused this tax to be applied to homes that certainly cannot be classified as "mansions." This important change will ensure that the tax which was originally promulgated to address the purchase of large homes still serves that purpose. Moreover, passage of this bill will spur more purchases of homes, which will revitalize communities and encourage economic activity, like the purchasing of furniture and remodeling services, providing sales tax revenue.

Legislative history

2007-08: A10110 - Latimer, Referred to Ways and Means S7425 - Leibell, Referred to Investigations and Government Operations 2011-12: A307 - Latimer, Referred to Ways and Means

Fiscal implications

To be determined.

Local Fiscal Implications:

To be determined.

Effective date

This act shall take effect on the first of April next succeeding the date it becomes law.