New York City Targets Luxury Second Homes with $500 Million Annual Pied-À-Terre Tax

(NEW YORK CITY) — Governor Kathy Hochul announced on April 15, 2026 that New York City would pursue its first-ever pied-à-terre tax, a yearly surcharge on luxury second homes valued at $5 million or more and owned by non-residents who do not use them as primary residences.

The proposal would raise at least $500 million annually for the city and would apply to about 13,000 residences. Supporters tied it to Mayor Zohran Kwame Mamdani’s push to close a $5.4 billion city budget deficit.

Properties covered by the plan would include one-to-three family homes, condominiums and co-ops valued above $5 million when the owner keeps a separate primary residence outside New York City. Homes used as primary residences, rented to full-time tenants, or occupied by the owner’s family would be exempt.

Examples cited by supporters include apartments at 220 Central Park South, where a luxury penthouse is valued at more than $200 million. The measure aims at owners who hold high-value homes in the city without living in them full time.

Hochul rolled out the proposal as Albany lawmakers continued state budget talks that were already two weeks overdue by mid-April 2026. The tax remains part of those negotiations, and the current proposal does not set final rate details.

Earlier versions suggested rates ranging from 0.5% to 4% of property value above $5 million. That range offers the clearest marker so far of how lawmakers have previously envisioned the surcharge, though negotiators have not settled the final structure.

Backers framed the measure as a way to draw more revenue from wealthy non-residents who own some of the city’s most expensive homes. The plan arrives as city officials search for new tax receipts without applying the surcharge to owner-occupied primary residences or apartments with full-time tenants.

City Council Speaker Julie Menin backed the proposal and called it “a smart, sensible proposal,” aligning herself with Hochul and Mamdani as the tax moved into the budget debate. Manhattan Borough President Brad Hoylman-Sigal also endorsed it.

Hoylman-Sigal said the measure would ensure the ultra-wealthy “fairly contribute towards the funding of essential services like policing and parks.” Supporters cast the proposal as a targeted levy on a narrow slice of the property market rather than a broad tax on city homeowners.

Public support figures cited by advocates were striking. The pied-à-terre tax is supported by 93% of New Yorkers.

Real estate industry critics pushed back, arguing the tax would be hard to administer and would ripple beyond the people directly paying it. Their objections focused less on whether the owners were wealthy and more on what a recurring surcharge could do to investment decisions in the city’s luxury housing market.

James Whelan of the Real Estate Board of New York said: “You’re going to have lost construction jobs, you’re going to have lower property values for full time residents, and you’re going to have higher costs as investment dries up across the city.” His warning summed up the industry case that a tax aimed at high-end second homes could reach construction, pricing and financing well outside that segment.

That argument rests on the way the proposal defines who pays. A non-resident owner with a qualifying property above $5 million would face the surcharge, but a similarly valued unit used as a primary residence would not. A home rented to a full-time tenant would also fall outside the tax, as would one occupied by the owner’s family.

Those exemptions shape the politics of the plan as much as its economics. Supporters can present it as a levy aimed at largely unused luxury housing, while opponents can point to the difficulty of determining who qualifies, how occupancy is measured and how the market responds once buyers price the surcharge into future deals.

The city’s estimate of at least $500 million annually makes the proposal one of the more ambitious revenue ideas in the current budget discussion. By tying the measure to about 13,000 residences, officials have kept the scope narrow in property count but broad in potential yield because of the values involved.

Luxury towers on Billionaires’ Row and elsewhere have long symbolized that concentration of wealth, and 220 Central Park South stands out in the examples used to sell the plan. A penthouse there valued at more than $200 million captures the type of asset supporters say should carry an added annual charge if it functions as a second home rather than a primary residence.

Mamdani has promoted the proposal in direct terms, casting it as a tax increase on wealthy property owners rather than on working residents. The city’s message has centered on who would pay, how few homes would fall under the plan, and how the money could help close the budget gap.

Albany now holds the next decision. Lawmakers must settle whether the tax stays in the final budget, what rates they set, and how closely the finished language tracks earlier versions that used the 0.5% to 4% range on property value above $5 million.

Until then, the proposal sits at the intersection of revenue politics and New York real estate, with supporters pointing to public backing of 93% and opponents warning of weaker investment. The debate has already fixed attention on a simple question: whether owners of luxury second homes in New York should pay an annual surcharge for keeping them.