New York Approves Second-Home Pied-à-Terre Tax: Who Pays, How Much
New York City’s new second-home tax is expected to more than double property taxes for many owners of ultra-luxury apartments, tax experts said.
State lawmakers on Wednesday passed a tax on nonprimary residences to help close the city’s budget gap. The so-called pied-à-terre tax will apply to second homes worth $1 million or more and is expected to raise $500 million in revenue.
Phased rollout: first two years and later rates
Tax details obtained by CNBC show the property tax will be rolled out in two phases. In phase one, covering tax years 2026-2027 and 2027-2028, condos and co-ops valued above $1 million as determined by the city’s finance department will be included.
During the first phase, properties worth between $1 million and $3 million will be taxed at 4% a year; properties worth $3 million to $5 million will face a 5.25% rate; and homes above $5 million will be taxed at 6.5%.
Although the rates look high, experts say the city’s outdated assessment and valuation system often greatly understates true market value, reducing the actual tax burden. They said city valuations are sometimes only 10% or less of real market value.
Gradual valuation updates: market-sales method from 2028-2029
The city will not immediately overhaul the system. Instead, it will gradually update valuations and the related tax, according to budget documents. Starting in tax year 2028-2029, property values will be based on comparable sales.
Because valuations will rise sharply, the tax rates will be reduced to offset that. After the valuation changes, properties worth $5 million to $15 million will be taxed at 0.8%; properties worth $15 million to $25 million will be taxed at 1.05%; and properties above $25 million will be taxed at 1.3%, the budget plan shows.
“It’s incredibly complicated,” said Robert Pollack, a New York property tax lawyer with Marcus and Pollack LLP.
Ken Griffin example: tax burden could rise sharply
New York City Mayor Zohran Mamdani made billionaire and Citadel CEO Ken Griffin the tax’s public face after posting a video in front of Griffin’s penthouse. Griffin later responded that he may cut back business and jobs in New York.
According to CNBC calculations, under the new tax, Griffin, a Florida tax resident, would see his Manhattan property tax bill jump by more than three times.
Griffin bought his 24,000-square-foot penthouse at 220 Central Park South in 2019 for $238 million. But government records show the city values the apartment at just $15.5 million. City records show Griffin’s property tax bill for tax year 2026-2027 is $858,332.
Pollack said that in the first two years of the pied-à-terre tax, Griffin’s property tax bill would more than double to about $1.87 million. Starting in tax year 2028-2029, it would rise to just under $4 million.
Griffin also reportedly bought two apartments at 740 Park Ave. for a combined $83 million. Under the new setup, those units would face $1.1 million in tax from 2028, bringing his total Manhattan property tax bill for all holdings to more than $5 million.
While city officials say wealthy residents can afford it, real estate brokers and tax lawyers say the sticker shock will be obvious.
“All my clients already feel like they’re paying too much,” Pollack said. “These numbers matter. I don’t care how rich you are.”
