New York lawmakers are quietly assembling one of the most consequential changes to high-end residential taxation in recent memory. As part of the FY 2027 budget negotiations between Governor Kathy Hochul and the State Legislature, two new real estate taxes are taking shape that, if enacted, will hit a meaningful slice of buyers in New York City and likely beyond.
At BrilTax Advisors, we are already fielding questions from clients about whether to accelerate closings, revisit financing, or rethink the use of LLCs and trusts in their next purchase. Below is a practical breakdown of what is on the table, who would feel it most, and the planning moves worth considering before the final budget bills are released.
What Is Being Proposed
Two distinct tax measures are being discussed inside the FY 2027 budget framework:
- A 1% transfer-style tax on all-cash residential purchases of $1 million or more, paid by the buyer.
- A new surcharge on high-value second homes used as pieds-à-terre.
Reporting on the budget negotiations indicates the New York City version of the cash buyer tax alone is projected to generate roughly $160 million toward closing the city’s budget gap. Lawmakers are also considering extending the levy statewide so that cash purchases above $1 million in the suburbs and upstate would be captured as well.
The 1% rate would be applied to the gross purchase price, not the net of closing adjustments, and it would sit on top of New York’s existing real estate transfer tax, the additional mansion tax for homes above $1 million, and any local recording fees.
How the Pied-à-Terre Surcharge Would Work
For the next two years, co-ops and condos would be assessed using a “market value” set by the New York City Department of Finance rather than the actual sale price. The surcharge tiers under discussion are:
- $1 million to $3 million of assessed market value: 4%
- $3 million to $5 million of assessed market value: 5.25%
- $5 million and above of assessed market value: 6.5%
The governor’s office estimates that roughly $1 million of assessed market value equates to about $5 million in sales price, so the surcharge would primarily land on the city’s true luxury inventory rather than mid-market apartments.
Why a Cash Buyer Tax, and Why Now
The proposal is not happening in a vacuum. According to data compiled by the Center for New York City Neighborhoods, all-cash buyers accounted for more than 60% of the roughly 18,000 residential sales in New York City during the first half of 2025. In Manhattan, nine out of ten purchases above $3 million during that same period closed without a mortgage.
Two forces are driving that trend. First, mortgage rates have remained elevated long enough that financing has become genuinely expensive relative to deploying available capital. Second, in the city’s most competitive segments, an all-cash offer is faster, more certain, and far less likely to fall apart during diligence. From Albany’s perspective, that creates a politically attractive base: a large, concentrated pool of high-end transactions, mostly executed by buyers who can absorb the additional cost.
Industry analysts have already questioned whether projected collections are realistic. Real estate analytics firm StreetMatrix has publicly warned that “mortgage workarounds for this new tax will soar,” and estimates roughly three out of four $1 million-plus home purchases in New York currently close in cash. Manhattan alone saw approximately $17.4 billion in cash purchases above that threshold in the prior year.
Who Should Be Paying Attention
The proposed taxes would not affect every buyer equally. The clients we expect to be most impacted fall into a few groups:
- High net worth individuals and families purchasing primary residences or pieds-à-terre in Manhattan, Brooklyn, or the Hamptons.
- Foreign buyers and investors who historically favor cash transactions for speed and discretion.
- Trusts and family LLCs that close real estate without traditional mortgage financing.
- Sellers of luxury inventory, who may see softer demand or longer days on market as buyers reprice deals to absorb the new cost.
If the statewide version of the cash buyer tax is enacted, the effect spreads to Westchester, Long Island, the Hudson Valley, and second-home markets across upstate New York.
Planning Considerations
While the final budget bill is still being drafted, prudent planning starts now. Two items we are discussing with clients:
- Closing timing. Contracts already in progress should be evaluated against the proposed effective date once it is published. Even a short acceleration of closing may save 1% of the purchase price.
- Financing structure. Adding even a modest purchase money mortgage to an otherwise cash transaction could technically remove a deal from the cash buyer tax base. Whether the final statute includes anti-abuse language for token financing remains to be seen, but the planning conversation is worth having early.
Political Pushback and What Could Still Change
The Real Estate Board of New York has already pushed back on the package, arguing the new proposal would further burden buyers and sellers in the city and threaten existing transfer tax revenue. That tension between immediate revenue need and longer-term market behavior is exactly what makes the final statute difficult to predict. The cash buyer tax, the pied-à-terre surcharge, or both could be diluted, expanded, or held back for a later legislative session.
Final Thoughts
New York’s housing market has absorbed plenty of tax changes over the years, but a 1% cash buyer tax paired with a tiered pied-à-terre surcharge would be a meaningful new layer for buyers at the top of the market. The details are still being negotiated and the final budget bills will determine whether these measures land as proposed, are softened, or expand further.
If you are planning a New York purchase above $1 million, considering selling a luxury property, or holding a pied-à-terre that could fall inside the new surcharge tiers, this is the right moment to run the numbers.
Schedule a consultation with BrilTax Advisors to review your specific transaction and put a plan in place before these rules are finalized.
