A proposal to levy a new tax on all-cash real estate transactions over $1 million in New York City is likely to be dropped from the state budget, according to people familiar with the negotiations.
New York state lawmakers had been working on the new levy as an option to help fill the city's budget deficit. The tax would have been levied at 1% of the purchase price and be paid by the buyer.
The state still plans to enact a new pied-à-terre tax on pricey second homes in the state budget, which has not yet been finalized.
City and state officials anticipate that tax, which would affect roughly 10,000 properties worth more than $5 million citywide, will yield $500 million in additional revenue for the city in the coming fiscal year.
Both the second-homes surcharge and the proposed levy on all-cash purchases were targeted at wealthy New Yorkers, stemming from Mayor Zohran Mamdani's pledge to raise levies on the richest residents. Governor Kathy Hochul has so far resisted calls to increase income or corporate taxes.
The city faced a multi-billion-dollar budget hole, which counts on state revenue to help close.
All-cash transactions have risen in New York as high mortgage costs have deterred financing. They're also an attractive option for sellers in the city's competitive real estate market — paying with cash is faster than dealing with the occasionally lengthy mortgage approval process, and less likely to fall through.
Such purchases made up more than 60% of the nearly 18,000 transactions in New York City in the first six months of 2025, according to data compiled by the nonprofit Center for NYC Neighborhoods.
The tax plan was criticized by the real estate industry, which said it would burden home buyers and sellers in the city and threaten existing government revenue. Some experts said there were too many workarounds for the new tax that would result in little money raised.
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