Proposed Tax on NYC Cash Sales Unravels in Albany

8 minutes read

New York’s proposed tax on all-cash purchases appears to be falling apart.

State lawmakers are now considering removing the levy from the budget, just a week after news of the plan broke, sources familiar with the process told Bloomberg. Under the proposal, buyers of New York City homes purchased without financing for $1 million or more would pay an additional 1 percent tax on the sale price.

The tax was floated as one of several potential pathways to fund the $4 billion package Gov. Kathy Hochul plans to funnel to the city to help cover its budget deficit. The proposal was expected to generate $160 million annually, according to Assembly Speaker Carl Heastie.

Earlier this month, Hochul announced that she and state legislators had reached an agreement on a $268 billion state budget, though she has yet to release the full proposal nearly two months after the April 1 deadline.

Real estate players expressed concern about the proposed tax. Real Estate Board of New York president Jim Whelan said the levy could slow home sales overall, taxes from which contribute heavily to the city’s budget.

“The City’s budget issues will not be solved by more taxes,” Whelan said in a statement last week.

Others said they were frustrated with the state releasing broad information about the planned tax without details of its mechanics, and on the heels of a similar announcement about a proposed tax on second homes in the city.

“This session has completely gone off the rails,” Jason Haber, a Compass broker and founder of an upstart trade group for residential agents, told The Real Deal on Friday.

The majority of Manhattan home sales are all-cash deals. Last year, 65 percent of all purchases in the borough were in cash, according to appraiser Jonathan Miller, who tracks transaction data. That share grew larger for deals over $1 million, where cash transactions accounted for 75 percent of sales.

— Sheridan Wall