New York’s pied-a-terre second-home tax passes: who pays and rates
New York City’s new tax on second homes is expected to more than double property taxes for many wealthy luxury apartment owners. State lawmakers passed the tax on nonprimary residences on Wednesday to help close the city’s budget gap.
The so-called “pied-a-terre” tax will be levied on second homes valued at $1 million or more and is expected to raise $500 million. CNBC obtained the tax details, showing the property tax will take effect in two phases.
Two-phase rollout: first based on current assessments from 2026
For the first two tax years, 2026-2027 and 2027-2028, condos and co-ops valued by the New York City Department of Finance at more than $1 million will be taxed.
Properties worth $1 million to $3 million will be taxed at 4% annually; properties worth $3 million to $5 million will be taxed at 5.25%; and properties above $5 million will be taxed at 6.5%.
Although the rates look high, experts say the city’s outdated assessment and valuation system significantly understates property values, which lowers the actual burden. They said city valuations are often only 10% or less of true market value.
From 2028 on, values will be based on comparable sales, with lower rates
The city will not overhaul the system all at once. Instead, it will gradually update valuations and taxes under the budget plan. Starting in the 2028-2029 tax year, property values will be set using comparable sales. Because assessed values are expected to rise sharply, tax rates will be adjusted downward to offset that.
Under the budget plan, after the valuation change, 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%.
Ken Griffin becomes the face of the second-home tax debate
After New York City Mayor Zohran Mamdani posted a campaign video outside Ken Griffin’s 220 Central Park South apartment, Griffin became the public face of the tax. Griffin then pushed back, threatening to move business and jobs out of New York in the future.
CNBC calculations show that because Griffin is a Florida tax resident, his Manhattan property tax bill would more than triple under the new tax.
Griffin bought the roughly 24,000-square-foot penthouse for $238 million in 2019. But government records show the city’s assessed value is only $15.5 million. According to city records, his property tax bill for the 2026-2027 tax year is $858,332.
In the first two years of the pied-a-terre tax, Griffin’s property tax bill would more than double to about $1.87 million. Starting in the 2028-2029 tax year, it would rise to just under $4 million.
Public reports also say Griffin bought two apartments at 740 Park Ave. for a total of $83 million. Under the new rules, those units would generate about $1.1 million in tax starting in 2028, bringing his total Manhattan property tax bill to more than $5 million.
While city politicians say the wealthy can afford it, real estate brokers and tax lawyers say the sticker shock could be significant.
Tax lawyer Robert Pollack said: “All my clients already feel they pay too much. These numbers are significant. I don’t care how wealthy you are.”
