New York State Mulls 1% Tax on Cash Purchases of $1 Million-Plus Homes

State legislators are debating a 1 percent levy on cash purchases of New York City homes worth $1 million or more, payable at closing. A similar statewide measure for $1 million-plus cash purchases, covering suburbs and upstate, is also under review. The proposal is part of FY 2027 budget talks.

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Mayor Zohran Mamdani and Governor Kathy Hochul are leading the tax agenda. Mamdani has pursued property-tax reforms to address a $12 billion gap, including a withdrawn 9.5 percent increase after backlash. The administration now backs a pied-à-terre tax on secondary homes worth $5 million or more, projected to raise at least $500 million. Hochul’s office confirmed a general budget agreement. Bloomberg reported the cash-purchase tax design; Citadel signaled a possible review of its $6 billion Midtown expansion after the mayor’s announcement.

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Bloomberg cited unnamed sources estimating the cash-purchase tax could generate up to $160 million in New York City. The pied-à-terre tax is projected to raise at least $500 million, narrowing the $12 billion shortfall and funding child-care, energy subsidies, and infrastructure. Targeting affluent cash buyers could raise substantial revenue without expanding the tax base, supporting the FY 2027 budget and influencing luxury-home demand and large-scale development. Citadel’s reconsideration of its Midtown project signals possible market effects.

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Governor Hochul’s spokesperson said the administration has reached a general agreement with the legislature on key budget items and that cash-purchase tax details will be set in the upcoming budget. Mayor Mamdani, with Hochul’s support, called the pied-à-terre tax essential to closing the $12 billion gap. Real-estate groups and homeowners condemned the earlier 9.5 percent proposal, prompting its withdrawal, and warn the cash-purchase levy could curb luxury-home demand and complicate financing for out-of-state investors.

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• “announced a general agreement with the State Legislature on many of the major elements of the FY 2027 Budget,” — spokesperson for Gov. Kathy Hochul

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• “Hochul has not generally supported taxes on the wealthy, but since the pied-à-terre tax targets people whose official, primary residences are outside New York, she is more supportive of it than other proposals against wealthy residents, according to The New York Times.” — The New York Times

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• “The tax in New York City alone could generate up to $160 million, according to the unnamed sources Bloomberg cited.” — Bloomberg (citing unnamed sources)

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• “Mamdani dropped the proposal this week following backlash from homeowners and the real estate sector.” — Forbes

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Lawmakers aim to finalize the FY 2027 budget before May’s end, at which point the cash-purchase tax’s scope and rate will be codified. Discussions on a statewide extension will continue during the budget-approval process, and further negotiations may set the timing of the pied-à-terre tax’s rollout.

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