A contentious proposal to tax second homes in New York City is widening, as officials now weigh lowering the threshold from $5 million to just $1 million in assessed value — a move that could bring significantly more property owners into the fold, the New York Post reports.
New details released Thursday by Governor Kathy Hochul’s office lay out a complex, two-stage framework for the so-called “pied-à-terre” tax. Crafted in coordination with New York City socialist Mayor Zohran Mamdani, the plan could eventually overhaul parts of the city’s long-criticized property tax structure.
The tax would be applied differently based on property type. According to The Post, for one- to three-family homes, it would only kick in once assessed values exceed $5 million. Rates would begin at 0.8% for properties valued between $5 million and $15 million, increase to 1.05% up to $25 million, and reach 1.3% beyond that. Under this model, a second-home owner with a property assessed at $11.5 million would owe about $92,000 per year.
Condos and co-ops, however, would face the tax much sooner. During the first two years, units with assessed “market values” above $1 million would incur new surcharges, a benchmark Hochul’s team says roughly equates to a $5 million sale price under the city’valuation system.
In that initial phase, properties assessed between $1 million and $3 million would be taxed at 4%, while those hitting $5 million or more would face rates as high as 6.5%. The proposal underscores how skewed assessments can be: a condo selling for $18.5 million might carry an assessed value of just $1.1 million, leading to a surcharge of about $45,115 under the temporary system.
After two years, officials plan to shift to a new valuation method for condos and co-ops, aligning them with how single-family homes are taxed. Under that revised approach, the same $18.5 million unit would see an annual tax of roughly $194,250.
According to The Post, in total, Hochul’s office estimates the measure would impact between 8,000 and 10,000 properties.
The rollout appears to have caught lawmakers by surprise. Despite ongoing budget talks, several legislators said they first learned the specifics through media coverage.
“This budget process is broken. It needs to be fixed,” said state Sen. Leroy Comrie, criticizing the administration for failing to brief lawmakers. “We should know these things. It shows a level of respect.” Assembly Speaker Carl Heastie expressed similar concerns, saying he had only a broad understanding of the proposal and lacked details.
The proposal reflects a political middle ground. Mamdani had initially pushed for a broader tax on wealthy residents, but that effort stalled, partly due to Hochul’s opposition. The second-home tax emerged as a more limited alternative, originally targeting properties valued at $5 million or more, affecting about 13,000 units across the city.
Revenue estimates vary widely. Hochul and Mamdani project the tax could bring in around $500 million annually, while City Comptroller Mark Levine puts the figure closer to $340 million to $380 million.
Real estate industry figures warn of potential fallout, however. Attorney Erik Zaratin predicts an uptick in legal challenges from property owners contesting their tax assessments. The Real Estate Board of New York also pushed back, arguing the measure would add to an already heavy tax burden on housing. President James Whelan cautioned that higher transaction costs could slow sales and ultimately reduce revenue for the city, state, and transit system.
The evolving plan highlights both the scope of the proposal and the uncertainty surrounding New York’s latest effort to draw more revenue from high-end real estate.