Democratic New York Governor Kathy Hochul projects that roughly 10,000 New York City properties would be subject to her proposed new pied-à-terre tax on luxury second homes, down from an initial estimate of about 13,000.
Hochul’s office updated the figure after reviewing newer data, having initially relied on older information, a spokesperson told The Wall Street Journal last week. The annual surcharge, tucked into the state’s overdue $268 billion budget, is designed to raise revenue from wealthy out-of-town owners and help plug New York City’s fiscal shortfall without broad-based tax hikes.
What the Pied-à-Terre Tax Would Do
The plan would add an annual surcharge to high-value second homes in New York City, applying to properties worth more than $5 million when the owner lives elsewhere. Rates would rise with property value, typically ranging from about 0.8 percent to 1.3 percent. Co-ops and condos would initially face higher temporary rates under a separate assessment system—around 4 percent or more—before shifting to the lower, graduated structure.
Hochul’s office says the measure would generate around $500 million annually, providing a new revenue stream to bolster city finances.
“We’re asking some of the wealthiest people in the world to contribute a bit more to generate targeted revenue while avoiding unintended consequences for New York’s tax base,” Hochul’s press office said in a statement to Center Square. The tax is slated to sunset after five years unless renewed, and is part of a budget deal expected to be voted on next week (the state budget is currently six weeks late).
Real Estate Industry Pushes Back
New York’s real estate sector is fiercely opposing the pied-à-terre tax. The influential Real Estate Board of New York (REBNY) has launched a campaign urging state lawmakers to kill the proposal, warning it would do more harm than good. In messaging to members and a suggested letter to legislators, REBNY argues the new surcharge would depress property values, raise costs for local co-op owners, and deter investment, “while crushing new development” amid a housing shortage.
The group sent an email to its supporters telling them the proposed tax “weakens the economy, raises costs, and won’t deliver the revenue promised,” and encouraged people to contact their state representatives.
James Whelan, REBNY’s president, similarly warned the tax “will not raise the amount of revenue expected,” in a statement to the New York Post, and would likely “lower property values and raise costs” without solving the city’s fiscal problems.
Real estate interests successfully defeated similar proposals in 2019, when lawmakers opted to raise other taxes on luxury home sales instead. Now, however, the pied-à-terre levy appears poised to move forward as part of the final budget package.
Budget Context and Political Trade-Off
Hochul’s move represents a significant shift in Albany’s approach to New York City’s budget woes. The idea of taxing expensive part-time residences had been debated for over a decade but never enacted.
Zohran Mamdani, the progressive new mayor of New York City, had pressed for higher taxes on the ultra-wealthy—including a local wealth tax or corporate taxes—to close the city’s projected $12 billion revenue gap over the next two years. He even floated a potential 9.5 percent across-the-board property tax hike as a “last resort” if the state didn’t act.
Hochul, a centrist Democrat who previously resisted such measures, effectively compromised by backing the second-home tax to avert broader tax increases.
“Thanks to the support of Governor Hochul, we are one step closer to balancing our budget by taxing the ultra-wealthy and global elites,” Mamdani said, calling the pied-à-terre surcharge the first of its kind in New York and a fair way for part-time residents to “pay their fair share.”
What Happens Next
State lawmakers are expected to take up the budget, including the pied-à-terre tax provision, in the coming days. If approved, the tax on luxury second homes would take effect for the next tax year, marking a notable shift in New York’s tax policy toward wealthy property owners.
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