New York City Issues First Notices for Luxury Second-Home Tax
The city will begin mailing pied-à-terre tax notices to owners of high-value secondary residences, with appeals due within 30 days, as part of a program expected to raise up to $500 million annually.
The New York City Department of Finance will start sending surcharge notices to owners of luxury secondary residences by Aug. 30, according to rules released for the city’s pied-à-terre tax. The tax applies to one-to-three-family homes valued at $5 million or more and co-ops and condos worth at least $1 million that are not used as primary residences. Rates range from 0.8% to 1.3% for houses and 4% to 6.5% for apartments, depending on value.
The department has subpoena power and can audit properties for up to six years to determine liability. Owners who provide false information may face a penalty equal to 50% of the tax bill. Notices will give recipients 30 days to appeal the assessment to the city Tax Commission or, in some cases, directly to the Department of Finance.
City officials estimate the levy could generate between $340 million and $500 million a year from roughly 10,000 properties. The tax is slated to run through 2031 unless the state legislature renews it, with a reassessment of property values planned for a second phase in two years.
Real estate industry representatives expressed concerns about implementation challenges. > "The Department of Finance’s proposed rules highlight the serious challenges of implementing the second-home tax fairly," said Zachary Steinberg, executive vice president of external relations & advocacy at the Real Estate Board of New York. He added that many cooperative owners could receive unexpected bills with limited time to contest them.
Critics have voiced opposition, while supporters argue the revenue will benefit the city’s budget. The public comment period on the rules ends July 9.