By Maria Tsvetkova
NEW YORK, May 28 (Reuters) – New York State Governor Kathy Hochul on Thursday signed a state budget that includes a progressive surcharge on luxury second homes in New York City, a move backed by Mayor Zohran Mamdani and expected to generate $500 million per year for the largest U.S. city.
The new “pied-a-terre” tax – a French term for a secondary residence that translates as “foot on the ground” – faced criticism from billionaires Ken Griffin, Bill Ackman and Kevin O’Leary. Mamdani had called Griffin’s $238 million penthouse condominium overlooking Manhattan’s Central Park a potential target of the proposal.
The surcharge would generate approximately $500 million in annual revenue for New York City, according to a summary of the budget, which legislators approved late on Wednesday.
The support from Hochul, who previously opposed tax hikes to fund Mamdani’s campaign promises, including “taxing the rich” to ease the lives of ordinary New Yorkers, marked a win for the New York City mayor as he seeks to close his city’s budget gap.
“If you can afford a multi-million dollar second home in New York City, you can afford to join its residents in supporting the greatest city in the world,” Hochul said last month on her Facebook account.
The rate at which secondary homes are taxed will slide based on the market value of the apartments that is currently understated for tax purposes under city law and represents only a fraction of their sales prices. The new budget ordered the city’s tax commission to review and correct all real property assessments.
In the first two fiscal years, 2026-2028, homes with the market values of $5 million to $15 million, $15 million to $25 million and more than $25 million will be taxed 0.8%, 1.05% and 1.3%, respectively, and surcharge rates for apartments with the market value $1 million to $3 million, $3 million to $5 million and over $5 million will total 4%, 5.25% and 6.5%. Starting in fiscal year 2028, tax rates for the apartments will be reduced to the same level as for houses, according to the budget.
Properties will be considered primary residences, and therefore not subject to the surcharge, if they are occupied by one of the owners, their immediate relatives – spouses, parents, children, siblings, grandparents and grandchildren – or tenants.
(Reporting by Maria Tsvetkova; editing by Donna Bryson and Nick Zieminski)
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