New York Proposes Tax on Luxury Second Homes

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New York state and city leaders are proposing a new tax on luxury second homes in New York City worth $5 million or more that are not the owner's primary residence. The tax, known as a pied-à-terre tax, would apply to both out-of-state and in-state residents who own high-end secondary properties in the city, with the goal of addressing income inequality and helping to close the city's budget deficit.

Why it matters

The pied-à-terre tax is an attempt to target the ultra-wealthy who own expensive second homes in New York City but do not live there full-time. Proponents argue it could help fund affordable housing and other social services, while opponents say it could drive away investment in the city's real estate market.

The details

The proposed tax would be an annual surcharge on any New York City residential property worth $5 million or more that is not the owner's primary home. It would apply to both out-of-state and in-state residents who own these types of secondary properties, but would exclude properties that are rented out full-time to tenants. The tax would be paid in addition to regular property taxes, and would impact both new buyers as well as longtime owners whose properties have increased in value.

• The pied-à-terre tax proposal is expected to be included in New York's state budget negotiations in 2026.
• A similar tax was previously proposed in 2019 but was ultimately derailed by real estate industry lobbying.

What’s next

The pied-à-terre tax proposal will be debated as part of New York's state budget negotiations in 2026. If approved, the details of how the tax would be implemented and applied will need to be finalized.