New York City\u2019s new pied-\u00e0-terre tax is meant to collect hundreds of millions of dollars from luxury vacation homes and other valuable properties whose owners live outside the five boroughs. But a spokesperson for Gov. Kathy Hochul says the state will also wield the second-home surcharge to identify cheats who live in the five boroughs but pay taxes elsewhere.<\/p>\n
Hochul\u2019s spokesperson Jen Goodman said the state\u2019s Department of Taxation and Finance is using New York City\u2019s list of properties that are potentially subject to the annual surcharge to help ferret out the fraud.<\/p>\n
\u201cThe pied-\u00e0-terre tax was designed to ensure people who can afford luxury second homes, but don\u2019t pay New York income taxes, are still contributing to the city they benefit from,\u201d Goodman said in a written statement. \u201cIf you\u2019ve been falsely claiming to be a nonresident in order to cheat the system, it\u2019s time to come clean \u2014 or our Department of Tax and Finance will take action to ensure you pay your fair share.\u201d<\/p>\n
New York law requires<\/a> residents to pay state income tax if they reside in the state for at least 184 days a year.<\/p>\n The crackdown could compel some New York City homeowners to either pay the pied-\u00e0-terre tax or claim New York residency and forfeit lower income tax rates in other states where they own property, like Florida, Pennsylvania or North Carolina. It could also lead to steep penalties against homeowners who live in New York City and meet the half-year residency standard, but file their taxes in other states, receive a driver\u2019s license elsewhere, or register their vehicles outside New York<\/a> and line streets and driveways with out-of-state plates.<\/p>\n Goodman declined to describe how the tax agency will use the tax rolls to identify fraud. But tax and real estate experts<\/a> warn New Yorkers who claim residency in other states with lower tax rates that they may be subject to intensive audits that include toll records, cellphone data and credit card transactions that show someone was actually in New York.<\/p>\n The state\u2019s focus on tax fraud in the pied-\u00e0-terre process was previously reported by Fortune<\/a> and The City Reporter.<\/a><\/p>\n State lawmakers enacted the pied-\u00e0-terre tax as part of the most recent state budget, following more than a decade of aborted attempts<\/a> to impose a surcharge on empty second homes as a way to generate more revenue for New York City. The new tax was a concession to Mamdani and the left-leaning wing of the Democratic Party that had called for a higher state income tax rate on the wealthiest New Yorkers. Hochul estimated the tax could raise $500 million for the city. But the state left the implementation of the new rule to the city\u2019s Department of Finance.<\/p>\n