New York state lawmakers passed a pied-a-terre tax on New York City second homes valued at $1 million or more to help close the city budget gap.
New York state lawmakers have passed a new tax on nonprimary residences in New York City, putting owners of second homes valued at $1 million or more on track for higher property tax bills.
The so-called pied-a-terre tax is intended to help close the city’s budget gap and is expected to raise $500 million, according to details reported by CNBC. The change is likely to fall most heavily on wealthy owners of high-end Manhattan condos and co-ops, though the precise impact will depend on how the city values each property.
For the first two tax years, 2026-2027 and 2027-2028, condos and co-ops with city Department of Finance valuations above $1 million would be subject to the new levy. Properties valued between $1 million and $3 million would face a 4% annual tax; those valued between $3 million and $5 million would face 5.25%; and properties valued above $5 million would face 6.5%, according to the budget details obtained by CNBC.
Those rates appear steep, but tax experts cited in the report said New York City’s assessment system often values properties far below their market prices — sometimes at 10% or less of what the homes could sell for. That means the initial tax burden may be lower than the rate schedule suggests for some luxury owners.
The system is set to change again beginning in the 2028-2029 tax year, when property values are slated to be based on comparable sales. As assessed values rise under that approach, the tax rates are scheduled to fall. At that point, properties worth between $5 million and $15 million would face a 0.8% tax; those between $15 million and $25 million would face 1.05%; and properties above $25 million would face 1.3%.
“It’s incredibly complicated,” Robert Pollack, a New York property tax attorney with Marcus and Pollack LLP, told CNBC.
Citadel CEO Ken Griffin has become the highest-profile example in the debate after New York City Mayor Zohran Mamdani posted a video outside Griffin’s Manhattan penthouse announcing the tax. Griffin, who is a Florida tax resident, later warned that he could pull back business and jobs from New York in the future, CNBC reported.
CNBC calculated that Griffin’s property tax bill on his 24,000-square-foot penthouse at 220 Central Park South, which he bought in 2019 for $238 million, would more than triple under the new structure. City records value the apartment at $15.5 million, far below its purchase price, and show a 2026-2027 property tax bill of $858,332. Pollack estimated the bill would rise to $1.87 million in the first two years of the pied-a-terre tax and to just under $4 million beginning in 2028-2029.
The broader question now is how owners, brokers and the luxury real estate market respond once the phase-in begins. Supporters argue the wealthy can absorb the cost, while tax attorneys and brokers say the size of the new bills will be hard for even affluent owners to ignore.
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