How The New York State Enacted Budget Fiscal Year 2019 To 2020 Affects Real Estate

Dated: 04/15/2019

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New York State Enacted Budget Fiscal Year 2019-2020 and How It Affects Real Estate Transactions


Governor Cuomo and state lawmakers recently approved a $175.5 billion spending plan and final state budget. Some real estate-focused aspects of the enacted budget include measures that make permanent the state’s 2% property tax cap, prohibit housing discrimination based on lawful source of income, create new real estate transfer tax rates in New York City, and make changes to the state’s STAR exemption and credit programs. 


Property tax cap

The final budget makes the current state 2% property tax cap permanent without any changes or expansions in the law.


New real estate transfer tax rates in New York City

The final state budget includes new real estate transfer tax rates in New York City on conveyances $2 million or more. In addition to the existing state real estate transfer tax rate of $2 for each $500 of consideration, the state budget creates a new transfer tax rate of an additional $1.25 for each $500 of consideration when the conveyance is $3 million or more on residential property in New York City, or when the conveyance is $2 million or more on non-residential property in New York City.

The state budget also expands the “mansion tax” in New York City, creating new real estate transfer tax rate tiers on conveyances of residential property valued at $2 million or more. This is in addition to the existing state “mansion tax” of a 1 percent transfer tax on residential property valued at $1 million or more. It is common for the purchaser to pay the mansion tax. 

The new additional transfer tax rates on residential property in New York City are:

      • 0.25% on conveyances $2 million but less than $3 million;

      • 0.5% on conveyances $3 million but less than $5 million; 

      • 1.25% on conveyances $5 million but less than $10 million;

      • 2.25% on conveyances $10 million but less than $15 million; 

      • 2.5% on conveyances $15 million but less than $20 million;

      • 2.75% on conveyances $20 million but less than $25 million;

      • 2.9% on conveyances $25 million or more.


The new revenue from these additional taxes will go toward funding the Metropolitan Transportation Authority. The new tax rates will take effect on July 1, 2019 and apply to all conveyances except those in contract entered on or before April 1, 2019.


Source of income

New Yorkers who receive some form of lawful source of income including non-wage income or subsidies will now be protected against discrimination in housing under state Human Rights Law. This is already law in much of the state including New York City, Nassau, Suffolk, Westchester, Buffalo, Syracuse and more. Protected classes would be able to file complaints through the New York State Division of Human Rights if they feel they have been discriminated against because of their lawful source of income.


STAR exemption program changes

The final budget contains an “incentive” to switch from the old version of the STAR exemption program to the new program (STAR credit program) where you pay the total property tax bill up-front and receive a STAR credit check at a later date. If you do not receive your check before your school taxes are due, the taxpayer could be entitled to interest. The new budget language, however, caps the STAR benefit at the existing rate if you are an existing homeowner participating in the STAR exemption program. If you switch to the new STAR credit program, your STAR benefit would be eligible for up to 2% growth over the prior year benefit.


Dave Legaz is a Real Estate Broker with Keller Williams Realty Landmark and the New York State Association of REALTORS® Secretary / Treasurer with over 55,000 REALTOR® members. If you are curious about this will affect your purchase or sale contact me anytime on my cell 718-216-9990.

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