New York’s pied-à-terre tax rules: who pays and how much
New York City’s new tax on second homes could more than double the property tax bills of many owners of high-end luxury condos. State lawmakers have passed a tax on nonprimary residences to help close the city’s budget gap.
The levy, called the “pied-à-terre tax,” will be imposed on second homes worth $1 million or more and is expected to raise $500 million.
Two-stage rollout: 2026-2028 levied by value band
According to tax details obtained by CNBC, the property tax will take effect in two phases. During the first two years (tax years 2026-2027 and 2027-2028), condos and co-ops valued at more than $1 million by the New York City Department of Finance will be subject to the tax.
Rates are set by valuation band: 4% annually for homes worth $1 million to $3 million; 5.25% for homes worth $3 million to $5 million; and 6.5% for homes above $5 million.
Although the rates look high, tax experts say the city’s valuation and assessment system likely undervalues properties, which lowers the real burden. City valuations are often said to be only 10% or less of true market value.
From 2028-2029, valuations are updated and rates are cut
The city will not overhaul the system all at once; instead, budget documents show it will gradually update valuations and the related tax burden. Starting in tax year 2028-2029, property values will be based on comparable sales.
Because valuations may rise sharply, rates will be lowered to offset that. The budget plan shows that after the valuation reset, homes worth $5 million to $15 million will be taxed at 0.8%; homes worth $15 million to $25 million at 1.05%; and homes above $25 million at 1.3%.
“This is very complicated,” said New York property tax attorney Robert Pollack.
Ken Griffin in the spotlight: tax burden expected to jump sharply
Billionaire and Citadel CEO Ken Griffin became the face of the tax after New York City Mayor Zohran Mamdani posted a video in front of Griffin’s luxury penthouse. Griffin later responded, saying he may reduce his business and jobs in New York in the future.
Under the new tax, CNBC calculations show Griffin, a Florida tax resident, could see his Manhattan property tax bill more than triple.
Griffin bought his 24,000-square-foot penthouse at 220 Central Park South in 2019 for $238 million. But government records show the apartment is valued by the city at just $15.5 million. Based on city records, Griffin’s property tax bill for tax year 2026-2027 is $858,332.
According to Pollack, during the first two years of the pied-à-terre tax, Griffin’s property tax bill would rise to more than $1.87 million; by tax year 2028-2029, it would climb to just under $4 million.
Griffin also bought two apartments at 740 Park Ave. for a total of $83 million. Reports said the tax on those properties from 2028 onward would be $1.1 million, bringing his total Manhattan property tax bill for all holdings to more than $5 million.
Although city officials say wealthy people can afford it, real estate brokers and tax attorneys say the actual burden will likely produce a noticeable price shock.
Pollack said: “All my clients feel they are already paying too much. These numbers matter, no matter how wealthy you are.”
