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Fiscal Policy · Luxury Real Estate · New York City · Pied-à-Terre Tax
New York Governor Kathy Hochul proposed an annual pied-à-terre tax on luxury homes in New York City valued over $5 million, targeting non-primary residences to generate $500 million annually and address the city's $2.2 billion budget shortfall.
The tax applies to approximately 13,000 units not serving as primary residences or rented out, with Hochul framing it as a "matter of fairness" given vacant $105 million apartments. New York City Mayor Zohran Mamdani, who advocated for taxing the wealthy, celebrated the proposal as a step towards balancing the budget without a 9.5% property tax increase, which the City Council rejected.
The Fiscal Policy Institute estimates the tax could generate significant revenue, with 330 units over $25 million contributing over half the projected $500 million. However, Real Estate Board of New York President James Whelan states the tax "will weaken the city’s broader economy," potentially eliminating construction jobs and lowering property values.
Empire Center for Public Policy's Bill Hammond views it as the "least damaging" of proposed revenue ideas, affecting a small group, but notes it does not solve underlying spending issues. The proposal requires State Legislature approval and builds on Hochul's $1.5 billion commitment to NYC's fiscal health.
