New York Passes “Pied-à-Terre” Tax: Who Pays and at What Rates
New York City’s new tax on second homes will more than double property taxes for many owners of luxury condos and other high-net-worth residences. The tax policy has been approved by state lawmakers in an effort to close the city’s budget gap.
The levy, known as the “pied-à-terre tax,” will tax non-primary residences valued at $1 million or more and is expected to raise $500 million.
Under tax details obtained by CNBC, the property tax will take effect in two phases. During the first two years of Phase 1 (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.
The rates are as follows: properties valued between $1 million and $3 million will be taxed at 4% per year; properties valued between $3 million and $5 million will be taxed at 5.25% per year; properties valued above $5 million will be taxed at 6.5% per year.
Although the rates may appear high, experts note that the city uses an outdated assessment and valuation system that often significantly underestimates property values, thereby reducing the actual tax burden. Experts say city valuations are sometimes only 10% of true market value or even less.
Gradually Updating Valuations: Lower Rates and Adjusted Coverage
Rather than immediately overhauling the assessment system citywide, valuations and associated tax burdens will be updated gradually based on budget documents. Starting in the 2028-2029 tax year, property values will be estimated using comparable sales. Because valuations could rise sharply, tax rates will be reduced accordingly to offset the increase.
After the valuation changes are completed, properties valued between $5 million and $15 million will be taxed at 0.8%; properties valued between $15 million and $25 million will be taxed at 1.05%; properties valued above $25 million will be taxed at 1.3%.
New York real estate tax attorney Robert Pollack said, “This is a very complicated system.”
After the tax proposal was introduced, billionaire and Citadel CEO Ken Griffin became the tax’s de facto poster child. New York City Mayor Zohran Mamdani announced the tax in a video filmed outside Griffin’s penthouse. Griffin later responded that he may pull business out of New York and reduce jobs in the city.
Example Estimate: Ken Griffin’s Manhattan Property Tax Could Rise Significantly
Under the new tax regime, CNBC calculated that Florida tax resident Ken Griffin’s Manhattan property tax bill would more than triple. According to reports, Griffin bought a 24,000-square-foot penthouse at 220 Central Park South for $238 million in 2019.
However, according to government records, the apartment’s assessed value under the city’s system is only $15.5 million. City records show Griffin’s property tax for the 2026-2027 tax year is $858,332.
According to Pollack, during the first two years of the pied-à-terre tax, Griffin’s property tax would rise to more than $1.87 million, and then increase to nearly $4 million in the 2028-2029 tax year.
In addition, Griffin reportedly bought two apartments at 740 Park Ave for a total of $83 million. By the estimates, the tax on those two properties would reach $1.1 million starting in 2028, bringing his total Manhattan property taxes to more than $5 million.
While city officials say the wealthy can “afford it,” real estate brokers and tax attorneys say the bill’s “shock effect” could be significant.
Pollack said: “All of my clients already feel they are paying too much. These numbers matter. I don’t care how rich you are.”
