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. Beneath, you’ll discover his Housing Notes column, which is able to now run on our website a number of instances every week. As well as, Miller’s quarterly report for New York Metropolis, which he printed by Douglas Elliman for greater than three a long time, will now be “The Actual Deal report, ready by Jonathan Miller.” Miller’s information enterprise, Streetmatrix, which gives hyperlocal information, will present statistics to TRD Knowledge subscribers.
— TRD editors
“By no means ask a barber in case you want a haircut”
That is an previous 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 widespread 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 value tranches will gradual gross sales, and the true 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 have 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 though absolutely the income quantity stays modest relative to town funds.
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 nicely, 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 may very well be doing amid all of the confusion about figuring out property valuations.
However right here’s a nuance I most likely missed
The speed below dialogue is 1 p.c of the acquisition value, paid by the customer at closing, comparable in magnitude to the prevailing mortgage recording tax or mansion tax ranges. In New York, this mortgage recording tax is predicated on the act of recording a mortgage and is charged as soon as at closing, based mostly on the mortgage quantity, not the acquisition value. If you don’t document a mortgage, there isn’t a mortgage recording tax.
The concept of this extra tax might be to seize income from gross sales that at present keep away from the mortgage recording tax. Bloomberg’s reporting signifies legislative leaders intend to incorporate this within the state funds, too, however the plan remains 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 most likely created by legislators as a method to make up for the loss within the mortgage recording tax income as money purchases turned de rigueur after the steepest ascent of mortgage charges in historical past from 2022 to 2025. This proposed money tax is trying extra like a method to squeeze in a corrective repair for the misplaced mortgage recording price 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 regulation, a recording tax usually doesn’t apply to co‑op mortgages, which is one purpose rental purchaser closing prices are materially greater than for co‑ops on the identical value. Although co-ops are exempt from the mortgage recording tax, the proposal explicitly notes that co‑ops might be taxed with this new “money tax.”
Closing ideas
Due to the aggressive way the pied-a-terre tax was implemented (like a bulldozer with out reaching out to the true property trade for suggestions), and the whining it generated by billionaires, the belief by the true 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 most likely be seen extra as a clawback of tax income, at the least within the context of condos that had evaporated because of unusually excessive money purchases, relatively than as extra legislative wrath from Albany.
The precise ultimate 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
