The New York State Legislature on Wednesday approved a tax on luxury second homes in New York City, targeting properties worth more than $5 million that are expected to bring in up to $500 million a year.
New York City’s wealthiest part-time residents are about to be hit with a new tax bill.
The state Legislature on Wednesday approved a tax on luxury second homes in New York City, according to the Wall Street Journal. The pied-a-terre tax, passed as part of the state budget, targets properties valued at $5 million or more and is expected to generate up to $500 million in new revenue annually, although some analysts predict that number could approach $350 million. It will take effect from July 1st.
Gov. Cathy Hochul’s office estimates that approximately 10,000 homes will be subject to the levy. Mr. Hochul, a Democrat who has publicly opposed widespread tax increases on high-income earners, introduced the measure in what observers characterized as a compromise with New York City Mayor Zoran Mamdani, a democratic socialist who is seeking new revenue to address a $5.4 billion budget deficit and fund affordability policies.
Mamdani said he expects the city to balance the budget through cost cuts, additional state aid and new taxes.
Eligible properties can pay tens of thousands of dollars annually at the lower end of the criteria. At the highest price, properties such as the Manhattan penthouse that Citadel founder Ken Griffin bought for about $238 million in 2019 could face annual charges of more than $1 million. Mr. Griffin publicly criticized the move, saying Citadel would prioritize growth in Miami over New York City.
New York joins a wave of Democratic-led states targeting big-ticket real estate and high incomes. Washington state and Maine each approved new taxes on millionaires earlier this year. Massachusetts voters in 2022 approved a 4% surtax on annual incomes over $1 million, and Rhode Island plans to implement a similar measure this summer on vacation homes valued at $1 million or more.
The City Finance Department will determine which homes qualify as second homes and calculate market value under the new law.
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