I was recently featured in Newsday’s article titled, “$1 million doesn’t buy a mansion on Long Island, but buyers pay a ‘mansion tax’ anyway.” Below are select excerpts from the article.
Ted Kritikos, of Daniel Gale Sotheby’s International Realty, recently helped some Long Islanders purchase a four-bedroom, three-bathroom home in Bayville.
Built in 1994, the Colonial-style house totals 2,400 square feet, and sits on a 5,400-square-foot lot. Along with being of modest size, the house could use some updates to the kitchen and bathrooms, Kritikos said.
Yet as part of closing costs, the buyers had to pay an additional tax of 1% of the $1.05 million sale price, as mandated by New York State law. Known as mansion tax, it applies to buyers of homes that sell for $1 million or more.
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Kritikos said he doesn’t see the demand easinganytime soon because there are plenty of people holding out on their home search in hopes of interest rates dropping.
“As soon as rates come down, we expect even more competitive situations to arise,” he said, “because all those buyers that were on the sideline are coming right back to the forefront, competing for homes and driving up prices on those homes.” (The average long-term mortgage rate in the United States is 6.18%, as of late December).
Perhaps something called a “mansion tax” should refer to property size instead of price, Kritikos added.
“Mansion tax should probably be tied to square footage, and that square footage, in my mind, is closer to 4,000 square feet,” he said. “That’s kind of the entry point in most neighborhoods and most home styles where someone could confidently say, ‘That’s a mansion.'”
For Kritikos’ clients who are looking to become first-time homeowners, the mansion tax usually comes as a surprise, he said: “It’s something I have to explain right away.”
The full Newsday article can be found here and you can learn more about the mansion tax in this blog post.