Understanding the Mansion Tax

ccording to Wikipedia, a "mansion" is a "very large dwelling." U.S. realtors define a mansion as a dwelling of over 8,000 square feet, whereas a traditional European mansion was defined as a house which contained a ballroom and ten or more bedrooms.


While most homes in Edgemont and Scarsdale do not contain a ballroom, many property owners might feel as if they are taxed like mansions.

If you are lucky enough to afford a home valued at over a million dollars, you should be aware of New York tax law, section 1402-a, which imposes a one percent tax upon the buyer in the purchase of residential one, two or three family homes, including condominium or cooperative units.

This tax is more commonly known as the “mansion tax."

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Buying A Home As A Tax Shelter Is Risky Now

Q: I sold my home this past May as a short sale and even though it sold for the amount I purchased it for in 2003, I still came away with a $50,000 promissory note to the lender that I'm paying off (without interest) for the next 15 years.
Somebody said I would have needed to rent the house to get the loss; how would that make any difference? When I do my 2010 taxes, is there a way that I can show the loss?
Also, I'm turning 60 years old in April and wondered if it makes sense to use my Roth IRA ($30,000) as a down payment on another small home since I'm renting and have at least seven years before I'd retire from federal service. I'm concerned that I don't have a tax shelter anymore other than my pre-tax retirement contributions each pay period.


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Is There a New 3.8% Tax on House Sales?

We have received many questions about a possible 3.8% tax which will be put on home sales beginning in 2013. We want to do our best to clarify this situation for everyone. We are not accountants and give you this information just as a simple answer to the misconception. Understand that, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information. 

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