New York pied-a-terre tax explained: who pays and at what rates
New York City’s new second-home tax is expected to sharply raise property tax bills for many owners of high-end luxury condos. After passage, state lawmakers plan to help close the city’s budget gap by taxing nonprimary residences.
The policy, known as the “pied-a-terre” tax, would apply to second homes worth $1 million or more and is expected to generate $500 million in revenue. It will be rolled out in two stages.
Phase 1 (2026-2027 and 2027-2028): tiered by city-assessed value
In the first two years (tax years 2026-2027 and 2027-2028), condos and co-ops valued at more than $1 million by the city’s Department of Finance will be subject to the tax.
The rates are: 4% annually for properties worth $1 million to $3 million; 5.25% for properties worth $3 million to $5 million; and 6.5% for properties above $5 million.
Although the rates look high, tax experts say the city’s outdated assessment system often underprices homes far below market value, which lowers the actual burden. In some cases, city valuations may be only 10% or less of true market value.
Reassessed over time (from 2028-2029): comparable-sales valuations and lower rates
Budget documents show the city will not scrap its assessment system all at once, but will update valuations and taxes gradually. Starting in the 2028-2029 tax year, property values will be estimated using comparable sales data.
Because valuations are likely to rise sharply, tax rates will be adjusted downward to keep things balanced. After the update: properties worth $5 million to $15 million will face a 0.8% rate; $15 million to $25 million, 1.05%; and above $25 million, 1.3%.
New York real estate tax attorney Robert Pollack said: “It’s incredibly complicated.”
Controversy and calculations: Ken Griffin’s Manhattan bill could soar
The tax drew wide attention after New York City Mayor Zohran Mamdani posted a video in front of Ken Griffin’s condo. Reports said Griffin later responded by threatening to reduce future business and jobs in New York.
According to CNBC’s calculations, Griffin, a Florida tax resident, would see his Manhattan property tax bill rise to more than three times its current level under the new tax. Two key data points: Griffin bought a roughly 24,000-square-foot penthouse at 220 Central Park South in 2019 for $238 million; government records show the city values the unit at just $15.5 million.
According to city records, Griffin’s property tax for the 2026-2027 tax year is $858,332. Estimates suggest that in the first two years of the pied-a-terre tax, his bill would rise to more than $1.87 million; from the 2028-2029 tax year, it would approach $4 million.
Griffin also bought two apartments at 740 Park Ave. for a total of $83 million. The report says their tax bill would reach $1.1 million starting in 2028, pushing his combined Manhattan property taxes above $5 million.
While city politicians argue the wealthy can afford it, brokers and tax lawyers say the sticker shock will be real. Pollack said: “All my clients feel they already pay too much. These numbers matter. I don’t care how rich you are.”
