Will the pied-à-terre tax be a windfall for cash-strapped New York City? Comptroller Mark Levine said Thursday that all depends on rules and enforcement for the yet-to-be enacted surcharge on wealthy property owners.
Gov. Kathy Hochul’s proposed tax on high-value second homes in New York City could raise roughly $500 million a year if carefully designed — but revenues could fall well short without clear rules on exemptions, enforcement and owner behavior, according to a new analysis that Levine released on April 30.
The city comptroller’s office found the tax could plausibly raise about $510 million annually from roughly 11,200 properties after adjusting condo and co-op values.
But the report warned that collections could drop to between $340 million and $380 million, depending on how the state and city handle rented units, condo and co-op valuations, two- and three-family homes, LLCs and trusts, and potential changes in taxpayer behavior.
“As we continue to work toward budget agreements at the City and State levels, it’s imperative that government leaders, advocates, and New Yorkers know how major new revenue proposals might reliably impact our budget,” Levine said.
He called the report “a clear-eyed, impartial analysis” of what the tax could raise, where uncertainties remain, and what assumptions need to be clarified.
City Comptroller Mark Levine said New York City’s proposed pied-à-terre tax could raise about $500 million annually, but only if officials clarify key assumptions around exemptions, enforcement and owner behavior.Photo by Lloyd Mitchell
The analysis lands as Mamdani and Hochul push the tax as a major revenue source to help close the city’s budget gap. Hochul has proposed allowing the city to tax non-primary residences valued at $5 million or more, a plan her administration says could generate at least $500 million annually, though key details — including rates and structure — have not yet been released.
The governor’s office said Thursday that details of the policy are still being negotiated, but maintained the proposal will meet the administration’s revenue target.
In response to Levine’s analysis, City Hall said the report supports the administration’s case that a carefully written tax can meet the $500 million target.
Dora Pekec, a senior spokesperson for the mayor, said Mamdani and Hochul have been clear that the tax would generate $500 million annually and that Levine’s report shows “thoughtfully crafting and implementing this legislation will do exactly that.”
A spokesperson for Council Speaker Julie Menin offered a more cautious response, saying the findings show the city needs both revenue options and a broader savings strategy. The spokesperson said Menin is focused on identifying savings and efficiencies without cutting essential services.
Pied-à-terre tax yield depends on implementation
Council Speaker Julie Menin said Levine’s findings show the city needs both new revenue options and a broader savings strategyPhoto by Lloyd Mitchell
The report said the tax’s ultimate yield will depend heavily on administrative choices. Properties used as primary residences would be exempt, as would homes rented to city residents. The report also found that many condos and co-ops that appear eligible based on assessed value may fall below the $5 million market-value threshold once appraised.
Levine’s office recommended that the Department of Finance and the Mayor’s Office of Management and Budget publish detailed assumptions behind any revenue estimate, including how they account for rental exemptions, market-value cutoffs and behavioral changes.
Two- and three-family homes present a particularly thorny issue. The report says that if market value is divided across units, many properties that initially appear taxable could fall below the $5 million threshold. Under one simple allocation, fewer than 200 two-family homes and fewer than 30 three-family homes would remain subject to the tax.
The report also flags LLCs and trusts as a major unresolved question. Those ownership structures are common in luxury real estate, but they can make it harder to determine whether a property is truly a second home, a primary residence or rented to someone else.
Levine’s office warned that some LLC owners may even be able to rent units to themselves unless the rules are carefully written.
Implementation could also take months. The report says the earliest billing could likely begin is November 2026, after the Department of Finance identifies potential taxpayers, sends notices, reviews attestations or appeals, and adds the charge to property tax bills.
The comptroller’s office also warned that enforcement could require new auditing capacity at the Department of Finance. Officials may need to review leases, residency claims, and private appraisals, especially for condos and co-ops, where assessed values often do not reflect true market values.
Manhattan would account for the overwhelming majority of affected properties. Of the 19,107 properties initially identified in the comptroller’s broader sample, 17,125 were in Manhattan, according to the report.