New York passes second-home tax: who pays and how much

According to tax experts, New York City’s new tax on second homes, or non-primary residences, will more than double the property taxes owed by many wealthy owners of luxury condos.

State lawmakers passed the tax to help close the city’s budget gap. The policy, known as the pied-a-terre tax, will apply to second homes valued at $1 million or more and is expected to generate $500 million in revenue.

Tax details obtained by CNBC show that the property tax will take effect in two phases. 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 tax rates are tiered as follows: properties valued between $1 million and $3 million will be taxed at 4% annually; properties valued between $3 million and $5 million will be taxed at 5.25%; and properties above $5 million will be taxed at 6.5%.

Although the rates look high, experts say the city’s assessment and valuation system significantly understates property values, which reduces the actual burden. They note that city assessments are often only 10% or less of true market value.

Valuations Updated Gradually: Rates Lowered After the 2028-2029 Adjustment

Rather than overhauling the system immediately, the city will gradually update valuations and the corresponding taxes based on budget documents. Starting in the 2028-2029 tax year, property values will be determined using comparable sales. Because valuations may rise sharply, tax rates will be reduced accordingly.

According to the budget plan, after valuation adjustments, properties worth between $5 million and $15 million will be taxed at 0.8%; properties worth between $15 million and $25 million will be taxed at 1.05%; and properties over $25 million will be taxed at 1.3%.

“It’s incredibly complicated,” said Robert Pollack, a New York property tax attorney.

Ken Griffin Becomes the Center of the Tax Fight: Burden Estimate and Key Figures

New York City Mayor Zohran Mamdani became closely tied to the tax after he posted a video in front of Ken Griffin’s penthouse and announced the measure. Griffin later pushed back, saying he may reduce business and jobs in New York in the future.

According to CNBC calculations, under the new tax, Griffin, who is a Florida tax resident, could see his Manhattan property tax bill more than triple.

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

During the first two years of the pied-a-terre tax, Pollack said Griffin’s property tax bill would rise to more than $1.87 million; starting in the 2028-2029 tax year, it is expected to approach $4 million.

In addition, media reports say Griffin also bought two apartments at 740 Park Ave for a total of $83 million. The related taxes would start at $1.1 million in 2028, bringing his total Manhattan property tax bill to more than $5 million.

Although city officials say the wealthy can afford it, real estate brokers and tax attorneys say the sticker shock will be significant.

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