Hochul Reviving Pied-à-Terre Tax on NYC Luxury Homes

Gov. Kathy Hochul is preparing to pick a fight with New York City’s luxury real estate industry, reviving a dormant proposal for a tax on second homes.

Hochul is set to propose an annual tax surcharge on second homes valued at $5 million and above, the New York Times reported. The goal is to raise $500 million annually in an attempt to lessen the city’s deficit.

Details on how the surcharge would be applied were not immediately available, but one possibility is a sliding scale model that would tax more valuable properties at higher rates. The governor aims to put the measure in the overdue state budget.

“New York City is the greatest city in the world, and the people who call it home should not be left carrying the burden alone,” Hochul said in a statement.

The proposal has the support of Mayor Zohran Mamdani, who said it would ensure “the wealthy contribute what they owe and our budget reflects our commitment to the working New Yorkers being priced out of our city.”

This is far from the first fight over a pied-à-terre tax. A 2014 proposal used the same starting value of $5 million for a 0.5 percent surcharge, capped at a $370,000 annual fee plus 4 percent of the amount above $25 million for the most valuable homes. That proposal went nowhere.

Five years later, a similar proposal built momentum, only to be thwarted due to lobbying from the real estate industry, which argued tax revenues would disappoint and wealthy, economic drivers would be less inclined to purchase homes in the city.

The pied-à-terre tax may be less impactful than it would’ve been several years ago. In 2023, the New York City Housing and Vacancy Survey found 59,000 units reserved for “seasonal, recreational, or occasional use,” down from 75,000 in 2017.

— Holden Walter-Warner