Gov. Andrew Cuomo on Friday confirmed that the controversial pied-à-terre tax, an annual levy on nonresidents’ homes valued at $5 million or more, is off the table.
During a press conference Friday evening, the governor said he and the legislature are working on an alternative to replace the tax in the proposed state budget. Instead of an annual tax, officials are working on a proposal for a one-time transfer tax on “high-end properties, residential and commercial” in New York. However, no further details on what the transfer tax would look like were provided.
The news follows various reports that the pied-à-terre tax had lost momentum, after resurfacing earlier this month. As of Wednesday, the governor maintained that the measure wasn’t dead.
“Some people believe we can do it with a real estate transfer tax and that would be better,” he told WNYC’s Brian Lehrer on Wednesday. “Obviously, if there’s a better way to do it, fine. But we’re committed to doing it and as of now on the pied-à-terre tax.”
A plan to legalize adult recreational marijuana also won’t make the budget, the governor said. It will instead be revisited after a budget deal is reached and before the end of the legislative session in June. Both the proposed pied-à-terre tax and the cannabis tax were eyed as possible revenue streams for the cash-strapped Metropolitan Transportation Authority.
“If we lose tax revenue generated by cannabis – then we will either need a 50/50 cash split between the city and state, or the pied-à-terre tax, which could raise as much as $9 billion,” the state’s Robert Mujica said earlier this month. “And we would still have a shortfall.”
Many in the real estate industry objected to the annual tax, claiming it would discourage high-net-worth individuals from investing in the city, which would, in turn, lead to less development. Brokers also warned that such a tax would hurt the city’s already soft luxury market, particularly among existing new development stock.
Cuomo noted that he won’t support another revenue stream congestion pricing — or any more funding for the MTA — in the budget without mandating certain reforms within the agency, including the debarment of the agency’s “bad” contractors. He said public campaign finance reform is also a priority for him in the budget.