New York City tax plan on $5 million second homes could raise $500 million a year

New York proposes a luxury second home tax

New York Gov. Kathy Hochul announced in April 2026 a plan to add a yearly surcharge on second homes in New York City valued at $5 million or more. The proposal targets homes that are not a primary residence.

Officials say it could raise at least $500 million a year for New York City. The measure still needs approval from state lawmakers in Albany before it can take effect.

If lawmakers pass it, New York would create its first statewide pied-à-terre tax on luxury non-primary homes. City leaders say the revenue could help support services used by residents.

Who would pay under the proposal

The surcharge would apply to one to three family homes, condominiums, and co-ops in New York City valued at $5 million or more when the owner’s primary residence is outside the city.

People who do not live in New York City full-time generally do not pay New York City personal income tax. Earlier versions of the proposal allowed owners to avoid the surcharge by making the home a primary residence, renting it to a full-time tenant, or letting a parent or child live there.

Hochul’s April 2026 announcement did not list exemptions, but the target remained luxury nonprimary homes.

About 13,000 homes could be affected

City officials estimate the tax would apply to about 13,000 residences across New York City. Many of these homes are in Manhattan’s most expensive buildings.

One example is 220 Central Park South, where Ken Griffin bought a penthouse for $238 million, setting a United States home sale record at the time. The mayor’s office also pointed to Russian auto dealer Alexander Varshavsky, who bought a Manhattan property in cash for $20.5 million.

These examples show the type of high-value second homes city leaders want to reach. Supporters say many of these properties are held as investments, not regular homes.

Many high value homes sit mostly empty

A 2023 New York City housing survey found about 59,000 units held for seasonal, recreational, or occasional use across the five boroughs.

The survey did not say how many of those homes were worth more than $5 million. Mayor Zohran Mamdani has argued that many luxury second homes sit empty for much of the year and act more like wealth storage than housing.

Supporters say many nonresident owners benefit from city services and property gains, even though they do not pay New York City personal income tax as full-time residents do. That became a key part of the proposal.

The city faces a large budget gap

New York City Comptroller Mark Levine projected in January 2026 that the city faced a $2.2 billion shortfall in fiscal year 2026 and a $10.4 billion gap in fiscal year 2027.

He said it was the first time since the Great Recession that the city faced a budget gap that large so late in the fiscal year. Levine blamed chronic underbudgeting of recurring costs, including rental assistance, overtime, and shelter spending.

His office said those recurring costs were underbudgeted by $3.8 billion in fiscal year 2026. That budget pressure intensified the search for revenue, including the proposed tax.

Albany budget delays shaped the tax debate

New York State’s budget deadline was April 1, 2026, but Albany missed it and kept negotiating after that date. Hochul raised the pied-à-terre tax during those late budget talks.

Earlier in 2026, Hochul and Mayor Zohran Mamdani announced $1.5 billion in added state operating support for New York City over two fiscal years, including $1 billion in city fiscal year 2026 and $510 million in city fiscal year 2027.

Hochul also backed New York City’s push to expand free child care, including the rollout of 2K seats announced in March 2026. That setting shaped the tax debate.

Top city leaders quickly backed the plan

Mayor Mamdani backed the proposal on the day Hochul announced it in April 2026. City Council Speaker Julie Menin also supported it, calling it a smart, sensible way to raise money for important city services.

Manhattan Borough President Brad Hoylman Sigal and Brooklyn Borough President Antonio Reynoso also praised the plan. The mayor’s office said 93% of New Yorkers support the tax.

Mamdani has long argued that wealthy people with luxury second homes should contribute more to help fund services for working New Yorkers and help close the city’s budget gap. That support gave the proposal backing from leaders.

Little-known fact: In New York City, property owners have no inherent legal right to a “view,” light, or air, allowing neighbors to construct buildings that block windows unless specific air rights are owned or the property is landmarked.

Critics said the plan could hurt sales

Nassau County Executive Bruce Blakeman, a Republican running against Hochul in 2026, criticized the proposal and said she had broken her pledge not to raise taxes.

Real estate groups have argued that a pied-à-terre tax could hurt luxury demand, weaken property values, and reduce spending by wealthy part-time owners in New York City.

Critics also warn that a weaker high-end market could affect construction jobs and spread to other parts of the local economy, even though the proposal is aimed at a small share of homes. That opposition showed why the plan faced a delay in Albany.

Interesting fact: Over 80% of NYC’s housing is more than 50 years old. In fact, over half (roughly 2 million units) were built before 1947.

The idea has been tried before

The pied-à-terre tax is not a new idea in New York. Versions of the bill were introduced in the 2013 to 2014 session and again in later sessions, including 2019.

The proposal generally started at homes valued at $5 million or more and used rising surcharge rates for higher values. But those earlier versions did not become law.

In 2019, the idea drew attention and strong pushback from the real estate industry before stalling. The 2026 proposal has more support because it is backed by both Gov. Kathy Hochul and Mayor Zohran Mamdani. That gave the idea momentum.

Older bill drafts showed possible rates

A legislative model from Sen. Brad Hoylman Sigal provides a clear example of how a pied-à-terre surcharge could be built. In that version, one to three family homes with a five-year average market value of $5 million or more would face extra rates ranging from 0.5% to 4.0% on values above $5 million.

Condominiums and co-ops with assessed values of $300,000 or more would face rates from 10% to 13.5% on assessed values above that level. Hochul’s April 2026 announcement did not spell out a final rate schedule. That left details open during negotiations.

Hochul said the city needs more support

Gov. Hochul has said she has increased support for New York City every year since taking office. In February 2026, she and Mayor Zohran Mamdani announced $1.5 billion in added state operating support over two years to help with the city’s fiscal problems.

At the same time, the city worked on savings plans and reserve moves to shrink its budget gap. Hochul framed the pied-à-terre tax as a way to help stabilize city finances without raising broad taxes on everyday New Yorkers who live in the city and rely on schools, parks, and transit. That message became central to the public case.

Supporters said the money would fund services

Money raised through the pied-à-terre tax would go to New York City and could help pay for services that nonresident luxury property owners use and benefit from. City leaders have pointed to public safety, transit, parks, and schools as examples.

Mamdani’s office said the tax targets out-of-city residents and global elites who use New York real estate to store wealth rather than as a full-time home.

Supporters say the tax is meant to make those owners contribute more to the city that protects their property values and supports the local economy. That shaped the message.

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Lawmakers still must decide the outcome

The pied-à-terre tax cannot take effect unless the New York State Legislature approves it during budget negotiations or through legislation. As of mid April 2026, Albany still had not finished the overdue state budget.

Lawmakers could approve the proposal, change it, or leave it out. Hochul has argued that people who can afford a $5 million second home that sits empty much of the year can also afford to contribute more to New York City.

If lawmakers pass the plan, New York would create its first pied-à-terre surcharge on luxury non-primary homes. That rests in Albany.

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This slideshow was made with AI assistance and human editing

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