New York's pied-à-terre tax rules: who pays and how much
New York City's new tax on second homes will significantly increase property tax bills for many owners of high-end luxury apartments, with tax experts expecting the impact to more than double.
State lawmakers on Wednesday passed the tax on non-primary residences to help close the city's budget gap. The levy, commonly called the "pied-à-terre tax," applies to second homes valued at $1 million or more and is expected to generate about $500 million in revenue.
Tax details obtained by CNBC show the tax will take effect in two phases. The first phase covers the 2026-2027 and 2027-2028 tax years: condos and co-ops assessed by the New York City Department of Finance at more than $1 million will be subject to the tax.
In this phase, properties valued between $1 million and $3 million will face an annual tax rate of 4%; properties between $3 million and $5 million will face 5.25%; and properties above $5 million will face 6.5%.
Although the rates appear high, experts say the city's outdated assessment and valuation system may significantly understate actual values, reducing the effective tax burden. They say city assessments are often only 10% or less of true market value.
The city is not immediately overhauling the assessment system; instead, valuations and tax burdens will be updated gradually under the budget plan. Starting in the 2028-2029 tax year, property values will be determined based on comparable sales. Because assessments may jump, tax rates will be lowered accordingly to offset the increase.
According to the budget plan, the post-adjustment tax rates will be 0.8% for properties valued between $5 million and $15 million, 1.05% for properties between $15 million and $25 million, and 1.3% for properties above $25 million.
"This is very complicated," said New York real estate tax attorney Robert Pollack.
After the new tax was introduced, billionaire and Citadel CEO Ken Griffin became the center of attention. New York City Mayor Zohran Mamdani announced the tax in a video filmed in front of Griffin's apartment. Griffin later fired back, saying he could pull business and jobs from New York in the future.
Under the new tax, CNBC calculated that Griffin's property tax bill in Manhattan would more than triple because he is a Florida tax resident.
Griffin bought the roughly 24,000-square-foot penthouse at 220 Central Park South in 2019 for $238 million. However, government records show the city's assessed value of the apartment is only $15.5 million. According to city records, his property tax bill for the 2026-2027 tax year is $858,332.
During the first two years of the second-home tax, Pollack estimates Griffin's property tax bill would rise to more than $1.87 million. Starting in the 2028-2029 tax year, that figure is expected to approach $4 million.
Reports say Griffin also bought two apartments at 740 Park Ave for a total of $83 million. Based on those calculations, the tax burden on those properties from 2028 onward would be $1.1 million; his total Manhattan property tax bill is therefore expected to exceed $5 million.
Although city politicians say wealthy residents can afford it, real estate brokers and tax lawyers say the "sticker shock" will be significant.
"All of my clients already think they're paying too much," Pollack said. "These numbers matter a lot. I don't care how rich you are."
