New York City’s skyline is famous for its towering luxury penthouses, but what happens when those multi-million dollar apartments sit empty most of the year?
Governor Kathy Hochul just announced a major proposal aimed at targeting exactly that.
The state is looking to implement a “pied-à-terre” tax on luxury second homes in NYC valued at $5 million or more.
The goal? To generate some serious revenue for the city without putting the burden on everyday New Yorkers.
Here’s the scoop on what this proposal actually means for the city and who it affects.
What is the pied-à-terre tax?
Basically, a pied-à-terre tax is a yearly surcharge on residential properties in New York City that aren’t occupied as a primary residence.
Under Hochul’s new proposal, this tax would exclusively apply to luxury homes worth $5 million and up.
This means the ultra-wealthy individuals who own these lavish second homes, but don’t live in the city full-time or pay city income taxes, would be required to contribute to the funding of essential NYC services.
And according to the Mayor’s Office release, an overwhelming 93% of New Yorkers actually support the measure.
- It specifically impacts one to three family homes, condominiums, and co-ops.
- The tax only applies to homes valued at $5 million or more.
- It impacts homes that are not the primary residence of the owner.
- It does not apply if the home is rented to a primary resident or occupied by the owner’s family.
Why is this happening now?
New York City is currently facing a significant budget gap, and Mayor Zohran Mamdani and Governor Hochul are looking for ways to balance the books.
The proposal is estimated to bring in a whopping $500 million a year in recurring revenue for NYC.
This includes revenue from some of the most expensive residences in the entire country like billionaire Ken Griffith’s $238 million Midtown penthouse and Russian auto-dealer Alexander Varshavsky’s $20.5 million home that was purchased entirely in cash.
This money would go towards funding vital city services like policing, parks, subways, and schools.
Governor Hochul made her stance clear in a recent press release, stating, “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.”
What does this mean for everyday New Yorkers?
The short answer: not much, directly.
The proposal is specifically designed to avoid impacting the wallets of everyday, working New Yorkers.
Instead, it aims to ensure that non-residents with ultra-luxury second homes are paying their fair share to maintain the city they use as a part-time playground.
Local leaders across the boroughs have shown support for the proposal.
Manhattan Borough President Brad Hoylman-Sigal pointed out that the global superrich often use Manhattan real estate to park their wealth while benefiting from the city’s safety and services.
Brooklyn Borough President Antonio Reynoso echoed this sentiment, adding that “New York City is not a playground for the ultra-rich.”
Whether this proposal becomes a reality remains to be seen, but it’s definitely a conversation starter about wealth, housing, and the future of NYC’s budget.
