Finalized State Budget Includes Mansion Tax, Not Pied-À-Terre Tax, After Real Estate Industry Intervenes

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In the lead-up to this year's state budget, a new annual tax on pricey second homes in New York seemed like a sure thing. But Gov. Andrew Cuomo killed the idea at the eleventh hour — and has opted instead for a one-time tax on luxury homes.

The state legislature and the governor approved the $175B state budget late Sunday night, The New York Times reports. It features what is being called a “mansion tax,” per the Times, which would come in the form of a real estate transfer fee.

Under the plan, buyers of multimillion-dollar homes would be charged two one-off sums at the time of the sale. Homes worth $25M or more would have a maximum tax rate of 4.15%, while cheaper homes would come with a lower percentage.

Ahead of the deadline, lawmakers had been talking about introducing a so-called pied-à-terre tax, which would put an annual tax on homes worth north of $5M that are not the owner's primary residence.

The measure reportedly had strong support in Albany, but it inflamed the real estate industry, with many claiming it would kill the demand for high-end homes and cripple the entire market.

Analysis from City Comptroller Scott Stringer suggested funds from the tax would bring in a minimum of $650M every year, which could be used for the city’s crumbling infrastructure. Cuomo announced he had killed the plan late Friday, following days of rumors Albany had soured on the idea.

“We know that the real estate industry was very present over the last couple of weeks,” state Sen. Brad Hoylman, who had sponsored the bill, told the Times. “I think they did a number on the pied-à-terre.”

The passed budget also included a measure enacting a toll for drivers who bring their cars south of 60th Street in Manhattan, the first of its kind in the country. That revenue would go to help fund the subway system and regional commuter networks.

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