Deep-pocketed NY buyers hurried to close sales prior to June 30 to skirt higher mansion taxes that went into effect July 1. And, as of July 1, big spenders vanished from the market.
Even the wealthiest man in America, Jeff Bezos, caught the “sale” bug and purchased three adjacent apartments overlooking Madison Square Park before the June 30 “deadline,” according to the New York Times. Bezos bought a triplex penthouse with five bedrooms, five full bathrooms, 3.5 half baths, library, private elevator and ballroom for a total of 10,079 square feet with 5,730 square feet of terraces overlooking the park and city vistas for $51.5M. In two additional separate purchases, Bezos bought two units just below and adjacent to the penthouse for $28.5M.
The difference in mansion taxes between buying those units pre-July 1 and post July 1 was the difference between paying $800,000 in taxes June 30 and paying $3.12M in taxes on July 1. Guess all of us like to save a few bucks here and there, even the wealthiest among us.
According to Jonathan Miller, president of the appraisal firm Miller Samuel, “The new tax (didn’t) cause more new sales, but motivated earlier closings, essentially pulling sales that would have…closed in July, August and September to beat the tax.”
New York’s mansion tax had been 1% on homes priced $1M+ for three decades. Now the tax rises incrementally with purchase prices up to 3.9% for the sales of $25M+.
Though Bezos’ purchases were staggering, they were not the most expense purchases in June. In fact, the highest price ever paid for a townhouse in NYC hit $77.1M for a doublewide townhouse on East 67th Street.
After six consecutive quarters of declining transactions, or as Miller called it a “dry spell,” sales hit 2,957 in June, up from 2,629 sales a year ago, and the median sale price rose to a record $1.2M, up +11% from a year ago, according to Miller Samuel and Douglas Elliman Realty.
In addition to an accelerating mansion tax, transfer taxes also increased from 0.4% to 0.65%.
Overall sales in New York increased +13% from one year ago however there was an increase of +37% in sales within the $2M-$5M range, the segment most effected by the mansion tax increase. In the top tier, sales increased +13% and DOM dropped from 184 to 153.
Samuel told HousingWire, “The higher level of sales in Q2 2019 was a stark contrast to the low level of activity last year after the new federal tax law brought expanded uncertainty to the market by capping the exemptions on property taxes and SALT (state and local taxes).”