We’re excited to announce that Jonathan Miller, who has lengthy authored probably the most authoritative report on the residential actual property market, is partnering with The Actual Deal. Under, you’ll discover his Housing Notes column, which can now run on our website a number of occasions every week. As well as, Miller’s quarterly report for New York Metropolis, which he revealed via Douglas Elliman for greater than three a long time, will now be “The Actual Deal report, ready by Jonathan Miller.” Miller’s knowledge enterprise, Streetmatrix, which offers hyperlocal knowledge, will present statistics to TRD Knowledge subscribers.
— TRD editors
“By no means ask a barber should you want a haircut”
That is an outdated Warren Buffett saying that I actually love. The phrase was initially attributed to Daniel S. Greenberg, who wrote it in the November 1972 issue of the Saturday Review, nevertheless it went mainstream when Warren Buffett used it at Berkshire Hathaway’s 1994 annual meeting.
The Real Deal asked the real estate industry what the proposed tax on cash purchases over $1 million will do to actual property, and it elicited a predictable response (some name it frequent sense). The response by trade insiders might be not so apparent to legislators. As a result of the U.S. is struggling a critical housing affordability disaster, including extra taxes throughout all worth tranches will gradual gross sales, and the actual property trade is a transactional enterprise. I get it. And my pithy touch upon Bloomberg for a similar subject: New York Plans Tax on Homes Over $1 Million Purchased With Cash.
I proceed to be amazed at how little these proposals anticipate the change in human conduct to keep away from a brand new tax
I estimated that about 75 p.c of Manhattan purchases are money over the $1 million threshold, and that about $17.4 billion in money purchases of properties had been made in 2025.
Since a majority of NYC transactions at or above the $1 million threshold are already all‑money, the tax would attain a big share of excessive‑finish consumers regardless that absolutely the income quantity stays modest relative to the town price range.
Getting a mortgage
Robert Frank at CNBC made a great point:
Create an account to proceed
Taking out small mortgages to sidestep the tax was my expectation as properly, and like the subject of estimating market worth for the pied-a-terre tax, I used to be beginning to get enthusiastic about all these potential value determinations we could possibly be doing amid all of the confusion about figuring out property valuations.
However right here’s a nuance I in all probability missed
The speed below dialogue is 1 p.c of the acquisition worth, paid by the client at closing, related in magnitude to the prevailing mortgage recording tax or mansion tax ranges. In New York, this mortgage recording tax relies on the act of recording a mortgage and is charged as soon as at closing, based mostly on the mortgage quantity, not the acquisition worth. If you don’t file a mortgage, there is no such thing as a mortgage recording tax.
The concept of this extra tax might be to seize income from gross sales that at the moment keep away from the mortgage recording tax. Bloomberg’s reporting signifies legislative leaders intend to incorporate this within the state price range, too, however the plan continues to be topic to negotiation and has not been enacted but. This money tax is meant to be on the time of switch, not like the pied-a-terre tax, which is an annual recurring tax.
After serious about the subject additional, this 1 p.c tax to be paid for money purchases above a million {dollars} was in all probability created by legislators as a solution to make up for the loss within the mortgage recording tax income as money purchases grew to become de rigueur after the steepest ascent of mortgage charges in historical past from 2022 to 2025. This proposed money tax is wanting extra like a solution to squeeze in a corrective repair for the misplaced mortgage recording charge whereas the planets are aligned in Albany.
Money sale market share in Manhattan
For at the least the previous dozen years, the common market share of Manhattan money gross sales was ±52.1 p.c, and now it’s 65 p.c. My assumption is that the rise in money gross sales took income from the mortgage recording tax.
Co-ops usually are not exempt from the money tax
As a result of co‑ops usually are not “actual property” below NY legislation, a recording tax typically doesn’t apply to co‑op mortgages, which is one motive condominium purchaser closing prices are materially greater than for co‑ops on the identical worth. Despite the fact that co-ops are exempt from the mortgage recording tax, the proposal explicitly notes that co‑ops will probably be taxed with this new “money tax.”
Ultimate ideas
Due to the aggressive way the pied-a-terre tax was implemented (like a bulldozer with out reaching out to the actual property trade for suggestions), and the whining it generated by billionaires, the belief by the actual property trade, together with me, was that this was one other assault on actual property, disrespecting the reliance NYC (and NYS) tax income has on this asset class. However the proposed money tax ought to in all probability be seen extra as a clawback of tax income, at the least within the context of condos that had evaporated as a result of unusually excessive money purchases, quite than as extra legislative wrath from Albany.
The precise last thought — OK.
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Learn extra
Housing Notes: The whining meant it wasn’t about the pied-à-terre tax
Housing Notes: Breaking down the billionaire halo effect
