NYC pied-à-terre tax: What to know about Hochul's proposal for second homes worth $5 million or more

New York Gov. Kathy Hochul on Tuesday proposed an annual tax on mostly vacant luxury homes owned by New York City’s wealthiest nonresidents. At least $500 million per year in recurring revenue would be raised, she said.

The charge, which Hochul calls a pied-à-terre tax, would apply to homes worth more than $5 million. It would apply only to homes that are not the primary residence of the owner or are not rented to a primary resident or occupied by the owner’s family, the governor's office said in a news release.

Hochul, speaking to reporters in Manhattan, framed the proposal as a "matter of fairness," citing a “$105 million apartment down the street that’s actually never been lived in."

"The property value of homes like that is driven by everything New York City has to offer, but the people who own these pieds-à-terre are not contributing in the same way the 8.3 million New York residents do," she said.

There is a $105 million, six-bedroom, 8,255-square-foot Park Avenue penthouse on the 96th floor that listings site Realtor.com said in 2024 was America’s most expensive home.

New York City Mayor Zohran Mamdani, who has made taxing the rich a centerpiece of his campaign and administration, celebrated the news, saying, "Thanks to the support of Governor Hochul, we are one step closer to balancing our budget by taxing the ultra-wealthy and global elites with a pied-à-terre tax — the first of its kind in our state."

New York City’s proposed pied-à-terre tax

$500 million

Amount it would raise yearly

$5 million

Minimum market value for home subject to the tax

13,000

Number of homes in New York City that would be subject to the tax

Here's what to know about the proposed tax.

Why is this tax being proposed now?

The city faces a $2.2 billion budget shortfall for the coming fiscal year, which begins in July, and a projected $10.4 billion gap the following year, city Comptroller Mark Levine said in January. Hochul said the tax proposal would build on her February commitment to allocate an additional $1.5 billion in operating expenses over two years to help address the city's fiscal challenges.

"We all know that the economic and financial health of New York City has an outsized influence on the rest of the state, indeed the nation," Hochul said. Other strategies, such as cutting city services, raising corporate taxes or property taxes overall, were "nonstarters" that risked eroding the tax base, she said.

It is also budget season for both the city and the state.

How would the proposed tax help the city balance its budget?

Absent a wealth tax, Mamdani has said the city would have no choice but to raise one of the only taxes controlled by the city: the property tax, which would rise 9.5%. The City Council, which must approve a property tax increase, has rejected any such proposed increase.

But based on Mamdani’s own numbers, the proceeds of Hochul’s pied-à-terre tax would still be billions of dollars short of the deficit Mamdani said the city is facing.

As a key plank of his insurgent mayoral campaign, Mamdani had proposed a more aggressive wealth tax — a 2% tax on income over $1 million and a higher corporate tax on the biggest businesses — but Hochul has been cool to that idea.

On Tuesday, Mamdani’s staff celebrated Hochul’s announcement and suggested more was to come.

"It’s a first win," Anna Bahr, Mamdani’s communications director, posted on X. "Mayor said Tax the Rich. The Rich are being Taxed."

In an interview, Bill Hammond, senior fellow at Empire Center for Public Policy, said the proposal should be seen in the context of Mamdani’s other proposals for generating revenue, which have included income tax hikes.

"This is her way of meeting the mayor part of the way where he wants to be," Hammond said. "Of all the different ideas on the table, this is maybe the least damaging, because it affects a really small group of people. ... These are people who, when they’re in the city, probably spend money and contribute to the economy in that way, but are not creating jobs in the city as business leaders."

How would this work?

Hochul declined to discuss possible rates, saying that was still up for discussion with city officials, but she did say about 13,000 housing units would be subject to the pied-à-terre tax. That’s about one-fifth of all the units the census says was used for seasonal, recreational or occasional use in the city in 2024. The proposal would need approval by the state Legislature.

The Fiscal Policy Institute, a left-leaning policy group that has previously proposed similar taxes for New York City, estimated that an earlier proposed version of the tax would have covered 7,380 units. At the bottom end, units with a market value of between $5 million and $6 million would have paid an average $3,000 a year, generating just 1% of the tax revenue. At the top end, just 330 units, each with market value of $25 million or more, would have paid an average of $883,000 per year, generating $293 million, or more than half the tax revenue.

What would this mean for Long Island?

Jeff Gold, of North Bellmore — a former Nassau assessment review commissioner and member of the board of assessors — said he doesn’t think a tax on pieds-à-terre will impact the market on the Island.

“The people who have $5 million second homes, they don’t care what taxes are,” he said. “I don’t think they care. Everyone else cares for them.”

Has this been tried before?

Hochul said Paris and Toronto, both cities with large numbers of international buyers, have successfully used versions of the pied-à-terre tax.

The Fiscal Policy Institute said in a 2019 report that many cities have used the tax not just to raise revenue but to increase the supply of affordable housing.

A 2019 proposal for a tax in New York City was not enacted, after it faced facing strong opposition from landlords and developers. Assemb. Deborah Glick (D-Manhattan), one of that bill’s sponsors, said then-Gov. Andrew M. Cuomo's support for the proposal withered after he "got some calls … I imagine it was from the real estate industry."

What do the experts say?

The Fiscal Policy Institute said in a statement Tuesday that while the tax would "raise significant revenue, it alone is not enough to stem the current budget shortfall, nor will it provide the funding needed to enact the full scope of Mayor Mamdani’s affordability agenda."

James Whelan, president of Real Estate Board of New York, the real estate industry lobby, said in a statement emailed by a representative that the pied-à-terre tax would "weaken the city’s broader economy," eliminating thousands of construction jobs, lowering property values and raising costs for New Yorkers overall.

Hammond, of the Empire Center, said any job losses would probably be minimal, but said the tax would not address underlying fiscal issues: "New York City in general has high taxes, and that revenue has been keeping pace with inflation in a pretty robust way, but spending has been growing faster."