New York governor floats tax on high-end second homes in NYC

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Dive Brief:

New York Gov. Kathy Hochul is proposing a new tax on second homes in New York City owned by non-residents and worth $5 million or more.

The levy would impact an estimated 13,000 properties, Gothamist reported. It is expected to generate $500 million annually for the city, Hochul said in a press release.

Following Hochul’s announcement, New York State Sen. Patricia Fahy proposed implementing a version of the tax statewide.

Dive Insight:

The U.S. continues to face a dearth of affordable housing options, and several states are exploring surcharges on high-end second properties, also known as a pied-à-terre tax.

Montana this year imposed a flat 1.9% tax on second homes, short-term rentals and vacant residential lots, a levy lawmakers expect will help lower taxes on year-round primary resident housing and year-round renters.

Rhode Island on July 1 will implement a tax on properties valued at more than $1 million that are not primary residences for the owners.

Upstate New York is seeing a “rapid increase” in such properties, which are often vacant and can drive up housing costs for full-time residents, Fahy said.

“That imbalance is increasingly felt in smaller communities, where even modest shifts in housing supply and municipal budgets can have outsized consequences,” Fahy said in a news release.

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