If you’re buying a ‘mansion,’ beware the taxman

As New York State ludicrously defines a mansion, such a property in a new development or otherwise owned by a building’s sponsor must sell for $1 million or more to earn that dubious distinction.

Now THIS is a mansion!

Now THIS is a mansion!

That’s the number used by legislators in 1989, when $1 million was $1 million. As of 2008, however, a million was $1.7 million, thanks to inflation. And whether $1.7 million would buy a mansion in New York City then or now certainly is open to question. Just try to find something that might correctly be called a mansion for $1.7 million – for example, a townhouse in excellent condition. You would be hard pressed to find one in good condition for under $10 million in popular neighborhoods. The highest priced one today is on the Upper East Side at $75 million, but there’s not a scintilla of hope that it well sell for anything like that sum.

(If you’re a regular reader of my biweekly newsletter, you’ve perhaps already subjected yourself  to this post.  But, hey, it’s a holiday weekend: Happy Independence Day!)

Even $1 million on the bottom line is too high to avoid the tax. That’s because there’s another tax that, in the state’s eyes, must be added to the purchase price. Continue reading