Mayor Zohran Mamdani partnered with Gov. Kathy Hochul on April 15 to announce a statewide pied-à-terre tax proposal.
The first of its kind in New York, the tax would mandate an annual surcharge for high-value secondary homes.
Pied-à-terre translates to “foot on the ground” in French, referring to properties used as part-time residences. The tax concerns secondary homes, condos and co-ops in New York City assessed to be worth above $5 million.
The specifics of the tax, however, are yet to be worked out. A circulating idea proposes brackets, increasing the tax rate for pied-à-terre valued between $5-$15 million, $15-$25 million and above $25 million.
According to Mamdani and Hochul, the goal of the bill is to tax ultra-wealthy, out-of-city residents and generate a prospective $500 million in revenue to close the city’s multi-billion dollar budget gap.
“Those who benefit from the city without living in a full-time capacity should contribute to the costs that it takes to run the city,” Hochul said.
Some notable figures who would fall under the tax are billionaire Kenneth Griffin, who owns a $238 million penthouse in Midtown, and Russian auto-dealer Alexander Varshavsky, who owns a $20.5 million property.
While the governor and mayor’s announcement has been enthusiastic and names figures who the tax would apply to, the tax currently offers little detail. It also has to grapple with a number of legal issues, including the complicated issue of home ownership.
In certain cases, homeowners disguise their ownership by claiming the residence is owned by a shell company, concealing the identity of the individual owner. To be effective, the legislation would need to make its way through the fog of shell companies, trusts and LLCs to tax individuals.
Finally, the bill must still make its way through the State Assembly and Senate. Rather than being presented as a solo bill, Hochul intends to include it as part of the state budget, which is already three weeks overdue, putting pressure on lawmakers to negotiate quickly.
A pied-à-terre tax has been attempted in the past, but after pressure from lobbyists in the real estate industry, it quickly collapsed. This time, the private nature of the bill’s negotiation in the Assembly and Senate may make it harder for the real estate lobby and the bill’s numerous other critics to reach it.
The announcement slightly differs from Hochul’s previous stance on tax hikes.
In January, in response to Mamdani’s public lobbying for higher income taxes, she said she was “not raising taxes for the sake of raising taxes. So, he’ll continue to say what he needs to say.”
With Hochul up for re-election in November, the announcement may serve as a way to please the progressive voter base rallying behind the mayor.
The tax comes amid the mayor’s push for a progressive agenda, following his signing of city investments, landlord crackdowns and anti-junk fee laws.
The announcement also continues Mamdani’s streak with Hochul following a $1.2 billion investment in 2K, 3K and extended child care.
