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A new tax on second homes in New York is once again gaining steam, with the so-called pied-à-terre tax now a priority for the state legislative session next year.
The sponsor of the legislation that would usher in the annual tax, state Sen. Brad Hoylman, told Bloomberg the levy would generate about $390M each year. An updated proposal was sent to committee for review and will be introduced next month when the state Legislature reconvenes.
The plans for the tax were front and center in deliberations early last year, but the finalized budget ultimately included a one-time tax on luxury homes instead. Its supporters kept momentum up, with Hoylman saying in September last year that the concept still had a lot of interest. The new plan would impose a 10% to 13.5% tax on homes that are second residences and are valued at a minimum of $300K, which Hoylman says means a market value of $5M.
Additionally, one- to three-family homes would be included with a possible rate of 0.5% to 4% if their market price is above $5M. Property owners will be able to avoid the tax if a private appraisal can prove the home is worth less than $5M on the market.
Members of the real estate community seethed over the tax when it was first on the table last year, saying it was part of the “soak the rich” mentality and would kill demand in an already-ailing luxury market. Now they say it could encourage wealthy New Yorkers who left the city during the coronavirus pandemic to make the move permanent.
“So many New Yorkers with the financial means of having multiple homes are staying in their out-of-New York City homes, thinking, ‘This isn’t so bad. I don’t really need to come back,’” Holland & Knight Real Estate Partner Stuart Saft told Bloomberg. “Maybe we shouldn’t be creating an incentive for people to leave.”
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