Hochul’s new mandate on second homes in New York City now applies to properties with a “market value” of $1 million or more (for the next two years, as if it will stop in two years). Originally, she said it would apply to second homes with a “market value” of $5 million or more. And as if that isn’t enough, there is a new enormous surcharge on all-cash home purchases over $1 million. Her mandate is part of Mayor Mamdani’s push to “tax the rich” and close the budget gap.
It might speed up the wealthy exodus from NYC to lower-tax states. Will they pay it and stay… or pack up and head to Florida/Texas?
Gov. Kathy Hochul’s office finally provided details on the pied-à-terre tax she and Mayor Zohran Mamdani envision on Thursday, revealing a convoluted two-phase plan that could ultimately lead to drastic changes to the city’s unloved property tax system.
The so-called “pied-à-terre” tax would apply to second homes in condos and co-ops with assessed values exceeding $1 million and to one-to-three-family homes assessed at over $5 million.
The proposal—first reported by the New York Times—also blindsided state lawmakers with whom Hochul is in never-ending budget negotiations and whose approval is necessary for the tax plan.
“This budget process is broken. It needs to be fixed,” an exasperated state Sen. Leroy Comrie (D-Queens) said, griping that lawmakers learned of the proposal from the media instead of the governor.
She probably keeps changing her mind every time Zohran calls her up.
Surcharge Is Like Unrealized Capital Gains
Hochul’s newest proposal clamps down hard on condos and co-ops, fulfilling Mamdani’s campaign pledge to go after “richer and whiter neighborhoods.”
The scheme would initially hit those units with a “market value”—an arcane figure determined by the city’s Department of Finance—of $1 million, with the tax for the next two years, according to the proposal.
Hochul’s office is justifying lowering the threshold by suggesting that, due to New York City’s byzantine property tax assessment system, the assessed market value of a $1 million property equates to a roughly $5 million sale price.
Any excuse will do.
Under Hochul’s scheme, properties with a market value between $1 and $3 million would pay a 4% surcharge [$40,000 and $120,000].
Properties at $5 million or more would be subject to a 6.5% surcharge, according to the governor’s office [$325,000].