New York’s pied-à-terre tax passes: rates and who it affects

New York’s new second-home tax will sharply raise property tax bills for many wealthy owners of luxury condos, tax experts said.

State lawmakers passed a tax on non-primary residences on Wednesday to help close the city’s budget gap. The so-called “pied-à-terre tax” would apply to second homes worth $1 million or more and is expected to raise $500 million.

Phase 1: Tax window opens in 2026-2027

Tax details show the property tax will be rolled out in two phases. In phase one, for tax years 2026-2027 and 2027-2028, the Department of Finance will tax condos and co-ops valued at more than $1 million.

In the first phase, properties worth $1 million to $3 million would be taxed at an annual rate of 4%; $3 million to $5 million at 5.25%; and above $5 million at 6.5%.

Although the rates look high, experts say the city’s older assessment and valuation system often understates the taxable base by a wide margin, which softens the apparent burden. In some cases, city valuations are only 10% or less of true market value.

Updated valuations in stages: comparable-sales pricing from 2028-2029

According to the budget documents, the city will not immediately reappraise everything; instead, it will update valuations in stages and adjust tax burdens accordingly. Starting in tax year 2028-2029, property values will be set based on comparable sales. Because valuations are expected to rise significantly, tax rates will be lowered to offset that change.

After the valuation changes, the budget plan proposes a 0.8% rate for properties worth $5 million to $15 million; 1.05% for $15 million to $25 million; and 1.3% for properties above $25 million.

“It’s very complicated,” said Robert Pollack, a New York real estate tax lawyer.

Billionaire and Citadel CEO Ken Griffin became a flashpoint in the debate over the tax. New York City Mayor Zohran Mamdani announced the tax from a video filmed at Griffin’s luxury home. Griffin later pushed back, threatening possible cuts to his business and jobs in New York.

Key case study: how Ken Griffin’s Manhattan property tax could change

Under the new tax structure, CNBC estimates that if Ken Griffin, a Florida tax resident, owned property in Manhattan, his property tax bill could more than triple.

Griffin bought the 24,000-square-foot penthouse at 220 Central Park South for $238 million in 2019. Public records show the apartment is assessed by the city at just $15.5 million. According to city records, Griffin’s property tax bill for tax year 2026-2027 is $858,332.

During the first two years of the pied-à-terre tax, Pollack’s estimate would raise Griffin’s property tax bill to more than $1.87 million. In tax year 2028-2029, the figure would approach $4 million.

Reports say Griffin also bought two apartments at 740 Park Ave for a total of $83 million. Under the reported assumptions, those units are expected to face about $1.1 million in tax from 2028 onward. That would push Griffin’s total Manhattan property tax bill above $5 million.

Although city politicians say the wealthy can afford it, real estate brokers and tax lawyers say the price tag could still make a very visible impact.

Pollack said, “All my clients already think they pay too much. These numbers matter. I don’t care how rich you are.”