New York lawmakers have proposed a new 1% tax on homes purchased with cash for at least $1 million in New York City, with the tax to be paid by buyers [1, 2, 3, 4]. The city expects this cash purchase tax to generate about $160 million annually [2, 3, 4]. Mayor Zohran Mamdani supports the tax and included it as a potential revenue source to address budget needs, according to his office [2, 3].
The move responds to a surge in all-cash purchases amid rising mortgage rates. Over 60% of New York City home sales in the first half of 2025 were all-cash deals, jumping to 90% for Manhattan properties priced above $3 million [2, 3]. The influx of cash buyers has prompted lawmakers to seek ways to capture revenue from this segment.
Governor Kathy Hochul and the State Legislature have reached a general agreement on key FY 2027 budget provisions that include this tax measure, her office said [2, 3, 4]. Officials are also considering expanding the cash purchase tax to cover the entire state, which would include suburbs and upstate regions, though those plans remain tentative [2, 4].
In addition, New York State proposes a separate tax on high-value second homes owned by wealthy non-full-time residents. Rates would range from 4% to 6.5%, depending on the market value above $1 million [2, 3]. This additional tax is expected to raise roughly $500 million annually for New York City to help fund public services and narrow budget gaps [2, 3].
The second-home tax will be introduced in two phases, initially applying to co-ops and condos valued over $1 million, with plans to adjust property valuation methods after two years [2, 3]. Purchases of second homes intended for use by family members will be exempt from this tax [2, 3].
The cash purchase tax plan was widely reported May 14-15, 2026, as part of ongoing FY 2027 budget negotiations [1, 4]. Officials are expected to finalize specific tax provisions as the budget process advances this year.
