What Is Albany’s New Cash Home Purchase Tax in NYC?
New York State Assembly Speaker Carl Heastie confirmed on May 17, 2026 that state lawmakers and Governor Kathy Hochul are adding a brand new tax on cash home purchases in New York City to the still-pending state budget agreement. The proposed tax targets residential property purchased with cash at a price of $1 million or more, charging the buyer 1% of the purchase price at closing.
The tax mirrors the structure of the city’s existing mortgage recording tax, which already applies to buyers who finance with a mortgage. Cash buyers have historically been exempt because the mortgage recording tax was designed to compensate the city and state for recording a mortgage document. No mortgage, no recording fee. This new tax eliminates that exemption by creating a parallel charge on the cash transaction itself.
The story broke in Gothamist and was confirmed by multiple New York public radio outlets and trade publications. The final state budget agreement is expected by the end of May 2026.
How Much Will the New NYC Cash Buyer Tax Cost at Closing?
The proposed rate is 1% of the purchase price. On a $1 million cash purchase, that adds $10,000 in new closing costs. On a $1.5 million purchase, $15,000. On a $2 million brownstone or two-family, $20,000.
For context, the existing mortgage recording tax charges 1.8% on loan amounts under $500,000 and 1.925% on loan amounts above $500,000. The city budgeted $812 million in mortgage recording tax revenue for fiscal 2026. Albany projects the new cash buyer tax will generate $160 million annually in additional revenue for NYC.
Who Does the New NYC Cash Purchase Tax Affect?
The buyer profile affected by this tax is not limited to wealthy or institutional purchasers. A $1 million price point in NYC reaches modest two-family homes on Staten Island’s South Shore, condominiums and co-ops in Bay Ridge and Park Slope, and starter homes in many Brooklyn and Queens neighborhoods that have appreciated significantly over the past decade.
Parents using accumulated home equity to purchase a Brooklyn apartment for an adult child, retirees selling a long-held suburban home to move into a Manhattan one-bedroom, small landlords acquiring a two-family in Queens, and working couples who saved for decades specifically to avoid mortgage debt are all categories that would face new tax liability.
According to data from the Center for NYC Neighborhoods, there were nearly 11,000 cash home purchases recorded in NYC in just the first half of 2025. The median cash purchase price was $939,000, placing a meaningful portion of those transactions right at or just above the $1 million threshold.
Why Is Albany Targeting Cash Home Buyers Now?
Mayor Zohran Mamdani’s administration originally sought broader income tax increases on high earners and corporate tax increases to close the city’s $5.4 billion budget gap. Governor Hochul publicly rejected those proposals. The $8 billion state aid package that allowed Mamdani to drop his 9.5% property tax hike threat relies on a combination of pension restructuring, the pied-a-terre tax on luxury second homes, and now this cash purchase tax.
Albany was unable to pass tax increases on high-income earners and is instead generating revenue through new transactional taxes on specific home buyer categories. Lawmakers are still debating whether the tax will apply statewide or be limited to New York City.
Should You Close Your NYC Cash Purchase Before the Tax Takes Effect?
If the tax is included in the final budget, it would take effect at a date specified in the legislation. Transactions that close before that date would not be subject to it. Buyers in active contract negotiations may want to discuss timing with their attorney and accountant.
Buyers considering structuring a purchase as part cash, part mortgage to fall under the threshold should consult professional advisors before making changes to their financing structure. The practical implication for anyone planning a cash purchase at or near the $1 million mark is timing, and the window may be narrow once the budget is finalized.
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