New York City has begun full-scale taxation procedures targeting high-priced “second homes” valued at over $5 million.
The New York City Department of Finance announced on the 30th that it plans to send out the first tax notices to those subject to the Pied-a-Terre Tax by the end of this coming August. This measure marks the first implementation of the “tax increase on the wealthy” policy promoted by New York City Mayor Zoran Mamdani and New York State Governor Kathy Hockul. The city estimates that approximately 10,000 households across its five boroughs will be subject to the tax, expecting to secure up to $500 million in additional annual tax revenue through this initiative. The tax applies only to non-residential properties where the owner does not actually reside. Therefore, households currently living in the property may file an objection with the city authorities within 30 days of receiving the tax notice. The taxation of ‘second homes’ will be implemented in two phases over the next five years to minimize disruption.
Phase 1, running from July 1, 2026, to June 30, 2028, applies to homes with a market value of $5 million or more and condominiums and co-ops with a market value of $1 million or more, as assessed by New York City. For Class 1 homes (one to three-family homes), tax rates will be applied based on value: 0.8% for values between $5 million and $15 million, 1.05% for values between $15 million and $25 million, and 1.3% for values exceeding $25 million. The tax rates applied to Class 2 condos and co-ops are 4% for properties valued between $1 million and $3 million, 5.25% for properties valued between $3 million and $5 million, and 6.5% for properties valued at over $5 million.
Phase 2, running from July 1, 2028, to June 30, 2031, sees the tax base shift to “actual transaction price.” Consequently, uniform tax rates will apply to all types of second homes—including houses, condos, and co-ops—at 0.8% for properties valued between $5 million and $15 million, 1.05% for properties valued between $15 million and $25 million, and 1.3% for properties valued at over $25 million.
The New York City second home taxation is a temporary measure for five years and will be automatically abolished at the end of June 2031 unless extended by the state legislature.