Mayor Zohran Mamdani’s administration acknowledged on Wednesday that some of the records used to identify possible payers of the city’s new pied-à-terre tax may be outdated, while finance officials said they are still working through how the surcharge will be administered in co-op buildings.
Department of Finance Commissioner Richard Lee said the agency relied on its existing information to identify properties that may be subject to the surcharge, but acknowledged that some applications, filings and exemptions may not be current.
“It could have been that we don’t have updated information on the applications, their filings, their exemptions,” Lee said during a July 29 press conference alongside the mayor in Lower Manhattan. “But we did use all the available information that we had in order to determine the residency status.”
The questions followed the city’s mailing last week of letters informing property owners that they may be subject to the surcharge and directing them to submit documentation if they believe the property is exempt.
Katie Honan of The City Reporter asked the administration about a co-op owner featured in the outlet’s recent reporting who received a letter despite already receiving the city’s condo and co-op tax abatement, which Honan said should indicate that the unit is a primary residence.
Lee said the department would examine the specific case, and said that applications tied to the abatement are sometimes outdated or not refiled, and said the current review process is intended to ensure the surcharge is imposed only on properties that meet its requirements.
Honan also said property taxes in co-op buildings are paid collectively and asked whether one shareholder’s failure to pay the surcharge could create consequences for the entire building. Lee did not directly answer the question.
“We are aware of this, and we are reaching out to each of the individual co-op developments,” Lee said. “It’s a little bit of a new territory for us because of the way the surcharge is designed.”
Lee said the department would provide an update as those discussions continue.
The administration also sought to distinguish the warning letters from a supplemental property assessment roll that DOF published on July 24 as part of the tax’s implementation.
Mamdani and Lee said the roll was not a targeted list of properties believed to be second homes. Lee said it included all residential properties already on the city’s final property roll.
“So it is all residential properties on this supplemental roll,” Lee said, adding that the idea that it was a targeted list of properties affected by the surcharge was false.
The DOF webpage says the roll “includes, but is not limited to,” properties that may be subject to the surcharge.
Mamdani confirmed that appearing on the supplemental roll does not necessarily mean an owner will be charged or has even been sent a warning letter.
Lee said the owners receiving letters are those DOF has identified as potentially subject to the surcharge. Neither he nor Mamdani could say on Wednesday how many letters had been mailed.
“We can get back to you on the specific number,” Mamdani said. “What I do know is that it is a very small fraction of the property rolls that we have put forward thus far.”
The surcharge applies to certain New York City properties that are not used as primary residences.
DOF’s rate table begins at a market value of $5 million for one-, two- and three-family homes, with rates ranging from 0.8% to 1.3% of market value. The agency’s webpage separately describes the surcharge as potentially applying to those homes when they are valued at more than $5 million.
Condo and co-op units face a lower threshold and higher rates. Units valued by DOF at $1 million or more may be subject to rates ranging from 4% to 6.5%.
A property may qualify for an exemption if it is the primary residence of its owner, a tenant or subtenant, an immediate family member of the owner, the sole beneficiary or beneficiaries of a trust, or one or more people who collectively hold a majority interest in an entity that owns the property.
Owners of one- to three-family homes and condos who received letters have until Aug. 21 to submit exemption applications to DOF. The deadline for co-op owners is Aug. 24.
Mamdani said owners would have until next March to work through questions with the city. Lee later said the Tax Commission would accept appeals through next March, while reiterating the Aug. 21 and Aug. 24 deadlines for owners seeking exemptions through DOF.
Charges for properties ultimately found subject to the surcharge will appear on property tax bills due Jan. 1, 2027.
The administration has funded 13 additional positions at DOF to implement the program and assist property owners, along with 11 additional positions at the Office of Administrative Tax Appeals.
Asked whether property owners should be concerned that the tax would not be implemented fairly or accurately, Mamdani said no. He said the city began its outreach months before the tax would be levied to help ensure the surcharge is imposed only on properties that are legally subject to it.
Before the surcharge was enacted, an April analysis by Comptroller Mark Levine’s office estimated it could generate roughly $510 million annually, but warned that collections could fall well short depending on how the city handled exemptions, valuations, enforcement, co-ops, LLCs and trusts.
The final law differs from the proposal Levine analyzed, including by establishing a $1 million threshold for condos and co-ops.