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New York passes Mamdani’s pied-a-terre tax. Here’s who pays and how much: Key Facts
New York state lawmakers passed a new tax on nonprimary residences Wednesday, targeting second homes valued at $1 million or more to help close the city’s budget gap. The so-called pied-a-terre tax is expected to raise $500 million in revenue and will more than double property taxes for many wealthy luxury apartment owners, according to tax experts.
Two-phase implementation
The property tax will take effect in two phases, according to details obtained by CNBC. In the first two years — tax years 2026-2027 and 2027-2028 — condos and co-ops valued at more than $1 million by the city’s Department of Finance will be subject to the tax. Properties worth between $1 million and $3 million face a 4% annual tax; those valued at $3 million to $5 million face a 5.25% tax; and those above $5 million face a 6.5% tax.While the tax rates appear large, experts note that New York City’s antiquated assessment and valuation system dramatically undervalues properties, reducing the actual burden. City valuations can often be 10% or less of true market value, they said.
Valuation overhaul and rate adjustment
Rather than overhaul the assessment system immediately, the city will gradually update valuations — and the tax — according to budget documents. Starting in the 2028-2029 tax year, property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate. After the adjustment, properties worth between $5 million and $15 million will be subject to a tax rate of 0.8%; properties between $15 million and $25 million will be taxed at 1.05%; and properties over $25 million will be taxed at 1.3%, according to the budget plan."It's incredibly complicated," said Robert Pollack, a New York property tax attorney with Marcus and Pollack LLP.
Ken Griffin at center of controversy
Citadel founder Ken Griffin became the face of the tax after New York City Mayor Zohran Mamdani posted a video in front of Griffin’s penthouse apartment announcing the measure. Griffin, who purchased his 24,000-square-foot penthouse at 220 Central Park South in 2019 for a U.S. record $238 million, fired back, threatening to pull back business and jobs from New York in the future. Under the new tax, Griffin — a tax resident of Florida — would see his Manhattan property tax bill more than triple, according to CNBC calculations.Market Context
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