Gov. Kathy Hochul has agreed to a new tax hike in budget negotiations with Mayor Zohran Mamdani, signing the state’s first levy on second homes, known as the pied-à-terre tax.
The proposal would levy an annual fee on one-to-three-family homes, condominiums and co-ops valued above $5M when owners have a separate primary residence outside of New York City.
)
The tax aims to target foreign oligarchs and the global ultrarich who use “real estate as a vehicle for wealth storage rather than as homes,” Mamdani's office said in a press release Wednesday. The city expects the policy to generate $500M in annual revenue.
“New York City is the greatest city in the world, and the people who call it home should not be left carrying the burden alone,” Hochul said in a statement. “If you can afford a $5 million second home that sits empty most of the year, you can afford to contribute like every other New Yorker.”
The release cites Citadel founder and billionaire Ken Griffin, whose $238M penthouse at 220 Central Park S. is still the most expensive home sold in the United States, and Russian auto tycoon Alexander Varshavsky, who reportedly purchased a $20.5M property in cash. Varshavsky is a naturalized U.S. citizen and New Jersey resident, according to a 2024 investigation by Russian independent economic news outlet The Bell.
The funds collected from the pied-à-terre tax would help address the $5.4B shortfall in Mamdani’s preliminary 2027 budget.
“Alongside the governor, our administration is fighting every day to make sure we address this fiscal deficit fairly, where the wealthy contribute what they owe and our budget reflects our commitment to the working New Yorkers being priced out of our city,” Mamdani said in a statement.
Mamdani campaigned on raising taxes on the wealthiest New Yorkers and corporations, and he doubled down on that pledge when he released his preliminary budget in February. If Hochul wouldn’t agree to do so, Mamdani said the city would be “forced to go down a second, more harmful path” of increasing property taxes by 9.5%.
The threat was met with substantial backlash, including from the new leader of the New York City Council.
City lawmakers proposed alternatives, like reducing the New York City pass-through entity tax credit to 75%. The incentive would allow New Yorkers to voluntarily pay tax on their business income, receiving an equal personal income tax credit. Of those who benefit from the credit, roughly 95% have an adjusted gross income above $1M, according to the council’s budget response.
In a statement, City Council Speaker Julie Menin called the pied-à-terre tax “a smart, sensible proposal.”
Similar tax proposals have been raised by city and state officials in the past. Then-Mayor Bill de Blasio in 2014 discussed a 4% surcharge on second homes valued at $5M and up.
A bill, a version of which was first introduced in the 2013-2014 session, is in the Assembly Committee.
The Real Estate Board of New York has already come out against the latest proposal, claiming that it would stifle construction, lower property values and raise costs across the board.
“This annual tax will weaken the city's broader economy — all without addressing its fiscal problems in the first place. Its impact will reach far beyond a small group of owners,” REBNY President James Whelan said in a statement. “Albany should focus on policies that encourage investment and housing production to create a more affordable city, not ones that stifle its growth.”
In response to a 2019 pied-à-terre tax proposal, a REBNY analysis determined that the fees would reap $372M per year, less than the $665M that officials projected at the time.
UPDATE, APRIL 15, 5:15 P.M. ET: This story has been updated to include a statement from REBNY President James Whelan.
)
)
)
)
)
)
)
)
)
)
)
)