On one coast, lawmakers are pushing to tax luxury second homes for the first time. On the other, voters may be asked to dismantle a tax that’s already raised more than $1 billion. The fight over who pays, and whether they stay, is playing out on two fronts.
In New York City, Gov. Kathy Hochul and Mayor Zohran Mamdani have proposed a pied-à-terre tax on second homes worth $5 million or more in the five boroughs. Projections suggest it could generate $500 million annually to close a projected $5.4 billion city budget deficit.
In California, a measure to repeal Los Angeles’ Measure ULA, the transfer tax on high-value property sales known as the “mansion tax,” has qualified for the November ballot, as has a separate proposal to levy a one-time 5 percent tax on the state’s approximately 214 billionaires.
The parallel campaigns have arrived at the same moment — and so has the resistance to them.
New York City: A proposal short on details
Hochul announced the pied-à-terre proposal as part of a late budget push. The measure would apply to New York City second homes valued at $5 million or more that are not rented out full-time or designated as the owner’s primary residence. It still requires state legislature approval.
“As Governor, I understand the importance of stabilizing the city’s finances without compromising on essential services New Yorkers count on,” Hochul said in an official 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.”
“Thanks to the support of Governor Hochul, we are one step closer to balancing our budget by taxing the ultra-wealthy and global elites with a pied-à-terre tax — the first of its kind in our state,” Mamdani said in an official statement.
The absence of specifics has opened the proposal to early legal scrutiny. A central unresolved question is whether the tax would be applied against the city’s assessed property values or market values — a distinction with enormous financial implications.
New York City’s assessment system for co-ops and condos does not use sale prices; it estimates what a property would rent for as an apartment, a formula that routinely produces assessments far below actual transaction values. The proposal has also not clarified whether the tax would apply to a property’s full value or only to the portion above the $5 million threshold, nor how non-residency status will be determined for owners who split time across multiple properties.
Democratic lawmakers outside New York City have pushed to expand the concept beyond the five boroughs, arguing that high-value second homes in communities including Saratoga Springs, Lake George and Lake Placid have driven the same affordability pressures. State Sen. Pat Fahy has proposed a version municipalities outside the city could opt into, with a lower $2.5 million threshold to reflect different cost-of-living levels.
Hochul’s office has indicated the governor supports a measure narrowly targeted to New York City and has said she would not back additional new taxes in this year’s budget.
‘It sends a message that you are not welcome here’
On the ground in New York, the proposal is already reshaping conversations between agents and clients, though not uniformly.
“Many of our buyers have put their purchases on hold,” said Bess Freedman, CEO of Brown Harris Stevens. “There is deep concern about the ramifications, and it’s unclear what exactly this tax will mean. If the formula is egregious, it will destroy the city.”
Bess Freedman
Freedman said the stakes extend well beyond the luxury segment. “This tax would hurt everything from development and jobs to restaurants and affordable housing,” she said. “The transfer and mansion tax is about $1.2 billion to the city every year … what will happen to that money if no one buys?”
“It sends a message that you are not welcome here,” Freedman said.
Peter Zaitzeff, licensed real estate broker and sales director of new development at SERHANT., said the uncertainty itself is already reshaping client behavior.
“Any time you introduce uncertainty at the high end, buyers pause, reevaluate timing, and in some cases look elsewhere,” Zaitzeff said. “I’ve had clients accelerate decisions ahead of potential changes, while others are taking a wait-and-see approach.”
Peter Zaitzef
Zaitzeff said California’s experience offers a direct lesson for New York.
“A pied-à-terre tax would likely dampen demand at the top of the market. These buyers are discretionary and added carrying costs matter,” he said. “California’s mansion tax showed us that when transaction costs rise, volume drops and deals stall, which ultimately impacts liquidity more than pricing.”
Even so, Zaitzeff said New York’s underlying appeal is durable: “New York will never be unattractive, regardless of any tax — NYC is an island of its own.”
Kevelyn Guzman, regional vice president and luxury property specialist at Coldwell Banker Warburg, thinks the appeal of New York is greater than a tax increase.
“There’s definitely awareness, but not panic,” Guzman said. “These are sophisticated buyers, and they’ve seen policy shifts before. What we are seeing is movement. We’ve actually gotten calls to list apartments since the announcement. Some owners are thinking, ‘Let me get ahead of this while the market is still absorbing it.’”
Kevelyn Guzman
Buyers, she said, are recalibrating rather than retreating. “They’re underwriting differently, thinking long-term, and trying to move sooner rather than later. It’s less about fear and more about timing and strategy.”
If the tax passes, Guzman said friction is inevitable — but New York’s appeal runs deeper than yield. “People aren’t buying here just for yield; they’re buying for access, for lifestyle, for global positioning,” she said. “What I do see is a more selective, more negotiated market at the top end.”
Jason Haber, an associate broker at Compass and co-founder of the American Real Estate Association, said the proposal’s lack of detail is itself the problem.
“Buyers and sellers need clarity to understand how this will directly impact them,” Haber said.
Jason Haber
He also raised concerns about the broader economic ripple effects of deterring pied-à-terre buyers, noting they contribute to the local economy through spending on dining, shopping and entertainment when in the city, while drawing minimally on city services when away.
“We want more, not less investment in NYC,” Haber said. “When pied-a-terre buyers purchase here, they aren’t just buying an apartment. When they come to town, they shop here. They dine here. They entertain here. That money spent has a direct impact on the local economy.
“Conversely, when they aren’t here, pied-à-terre owners are not using city services. They aren’t calling 911, they aren’t creating potholes on our streets, and they aren’t using our parks. In short, they tax the city little, yet we are about to tax them a lot.”
California: 3 fights at once
In California, the battles are running in multiple directions at the same time, and the stakes on each are significant.
Measure ULA has raised more than $1 billion since taking effect in 2023. The city of Los Angeles announced a $360 million award for future affordable housing projects. Supporters say the revenue has advanced close to 800 affordable homes and helped more than 10,000 renters remain housed.
But critics say the tax has slowed construction. Not just of mansions — of apartments, commercial properties and mixed-use developments, because the levy applies to any sale crossing the dollar threshold. Investment has stalled. Lenders have pulled back. The tax meant to fund affordable housing, some argue, has made building it harder.
The numbers in the luxury market are hard to dispute. Jason Oppenheim, president of the Oppenheim Group, tracked MLS sales above $5.3 million — the mansion tax threshold — across three markets in the 12 months before the tax took effect and the 12 months ending March 31, 2026.
Jason Oppenheim
In Los Angeles, he said, sales fell from 593 to 363 — a 39 percent decline. In Newport Beach, which sits outside the tax, sales rose from 189 to 293, a 55 percent increase. Beverly Hills, also outside the tax, held essentially flat at 103 sales compared to 100 in the prior period.
“The economic toll that the mansion tax has taken on Los Angeles — it’s palpable and obvious, and the numbers don’t lie,” Oppenheim said. “We’re seeing a lot of the wealthy people go to Newport Beach, Beverly Hills, areas without the tax — or, unfortunately, leave California altogether, which is the worst-case scenario for everyone.”
Those market-level observations align with an April 2025 analysis by the UCLA Lewis Center for Regional Policy Studies, which found that since Measure ULA took effect, the odds of a Los Angeles property selling above the tax threshold fell by roughly 50 percent. The sharpest declines were in non-single-family transactions — multifamily, commercial and industrial properties — which fell 30 to 50 percent.
The researchers estimated the tax has cost the city approximately $25 million in lost property tax revenue in its first year, with those losses compounding over time if the measure continues without reform.
Cara Ameer
Cara Ameer, a bi-coastal agent licensed in California and Florida with Coldwell Banker, said the tax has effectively frozen inventory.
“The mansion tax has constricted moving and has a lot of people just sitting on their properties,” she said. “It has caused a freeze in inventory as selling has gotten a lot more complicated on top of all of the higher costs associated with selling and buying.”
Ameer said the effects have extended well beyond the luxury tier.
“Real estate has a contagion effect — with the cost of living so high in California, coupled with a pro-tax environment on top of inflation and the cost of insurance, this has impacted many companies’ ability to keep employees and [kept] their costs of doing business high, hence why numerous corporate headquarters have left California as well,” she said.
On the prospect of repeal, Ameer said the change would need to be paired with a broader rethinking of how cities fund themselves.
“You can’t penalize one sector of the market to subsidize others,” she said. “It’s a lopsided effect that has created some real issues in this state.”
If the repeal passes, Oppenheim projects the market could recover 15 percent to 25 percent. Against a decline he puts at more than 50 percent, he said, that would be meaningful — but not a full restoration.
“It’s not a panacea,” he said. “It’s one of a multitude of factors that have pushed people out of Los Angeles. But this certainly will boost the market.”
On the same November ballot will be the California Billionaire Tax Act. Sponsored by Service Employees International United Healthcare Workers West, the measure has gathered more than 1.5 million signatures — well above the 875,000 required — and would impose a one-time 5 percent tax on California residents holding $1.1 billion or more in worldwide assets as of Jan. 1, 2026, with supporters projecting $100 billion in revenue over five years.
Gov. Gavin Newsom has publicly opposed the billionaire tax, warning it could accelerate an exodus of the state’s wealthiest residents. Nvidia CEO Jensen Huang, whose net worth would make him subject to the measure, has taken a different view, saying in a Bloomberg Television interview that the prospect of a higher tax bill has not factored into his thinking.
The money is already moving
The wealthy aren’t waiting for November.
Alphabet co-founder Sergey Brin — whose net worth Forbes estimates at $263 billion — has invested millions of dollars in competing ballot initiatives designed to block the billionaire tax, according to The Wall Street Journal. Brin recently purchased a $51 million Miami property.
Meta CEO Mark Zuckerberg purchased a $170 million compound on Miami’s Star Island. Venture capitalist David Sacks relocated to Austin and opened a new office there in late December.
In New York, Citadel founder Ken Griffin — whose 24,000-square-foot penthouse at 220 Central Park South was featured in Mamdani’s announcement video — has signaled he may scrap a planned Midtown development project in response to the proposed tax.
The fiscal argument
Supporters on both coasts frame these measures as a response to a specific crisis: California’s healthcare shortfall and NYC’s deficit. Opponents argue the math doesn’t hold. Relocation, legal challenges and asset restructuring will erode yields below projections, they contend. Revenue gained upfront will be lost over time.
The nonpartisan Legislative Analyst’s Office has offered a more measured view: Some wealth migration is likely, but the one-time nature of the California billionaire tax means projected revenue would outweigh losses. On the mansion tax repeal, the LAO estimates local governments statewide would lose several billion dollars annually, money that currently funds schools, roads and services in the communities where that real estate sits.
New York and California are not alone in this fight. Across the country, state and local governments have spent the last several years experimenting with transfer taxes, wealth levies and luxury surcharges. The results have been mixed, but the debates they have generated are remarkably similar regardless of geography: The wealthy will leave, the revenue projections are optimistic, the measures will chill investment. Los Angeles now has two years of data suggesting those arguments are not hypothetical.
What is becoming clear, on both coasts and in the cities between them, is that the era of treating luxury real estate as a reliable, passive revenue source may be shifting. The owners of that real estate have more options than they once did. Post-pandemic mobility and a generation of infrastructure investment in Sun Belt cities have made leaving not just possible but, for some, preferable.
The November ballot in California will offer one verdict. New York’s legislature will offer another. Neither is likely to be the last word on who pays — and who stays.
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