NYC starts new tax on homes that aren’t primary residences

New York City’s second-home owners need to check their mail, Mayor Zohran Mamdani said Thursday. Property owners have started to get notified via mail that they may be subject to the city’s new “pied-à-terre,” or foot-on-the-ground, tax, Mamdani said in a news release. The city plans to levy an annual tax on non-primary homes valued at least $5 million and condominium and cooperative units valued at least $1 million. The mayor, elected last fall with backing from the Democratic Socialists of America organization, said this new tax on the rich will collect revenue for funding parks, schools, and libraries.

How does the tax work? The progressive tax will start at 0.8% and go up to 1.3% of the market value for homes worth $25 million or more. Condominium and cooperative units will have tax rates up to 6.5%, according to the city’s finance department. The tax would also apply to the owners of rental properties not used by the tenants as a primary residence, according to an eligibility guide from the city.

The tax could generate up to $500 million in annual revenue, Mamdani said when the tax was first announced in April. He said it would affect homes like billionaire Ken Griffin’s $238 million penthouse. Griffin, an investor, primarily resides in Miami, Fla.

What have critics said? The tax could potentially discourage future real estate investments in the city, said Raymond Sanseverino, chair of Loeb & Loeb’s Real Estate department. This, in turn, could slow construction and reduce work for laborers. It may also make the city be perceived as less welcoming to businesses, Sanseverino said.

Dig deeper: Read Elizabeth Black’s report on Mamdani’s plans for city-owned grocery stores.