New York approves Pied-a-terre tax: who pays and at what rates
New York City's new tax on second homes (non-primary residences) will significantly raise property tax bills for many owners of high-end luxury condos. Tax experts say the levy will help close the city’s budget gap.
State lawmakers passed the plan to tax non-primary residences on Wednesday. The so-called pied-a-terre tax will apply to second homes valued at $1 million or more. The tax is expected to generate about $500 million in revenue.
Two-phase rollout: 2026-2028 and 2028-2029
According to tax details obtained by CNBC, the property tax will take effect in two phases. The first phase covers the 2026-2027 and 2027-2028 tax years. During that period, condos and co-ops with assessments determined by the Department of Finance above $1 million will be included.
In the first two years, rates will be tiered by assessed value: 4% annually for $1 million to $3 million; 5.25% annually for $3 million to $5 million; and 6.5% annually for values above $5 million.
Although the rates appear high, experts note that the city's long-used assessment and valuation system may significantly understate property values, reducing the actual tax burden. Some say city assessments are often only 10% or less of true market value.
Rather than overhauling the system immediately, the city will gradually update assessments and taxes based on budget documents. Starting in the 2028-2029 tax year, property values will be determined using comparable sales. Because assessed values may rise sharply, rates will be lowered accordingly to balance the burden.
For the second phase after the 2028-2029 tax year, the budget plan adjusts the brackets to: 0.8% for $5 million to $15 million; 1.05% for $15 million to $25 million; and 1.3% for amounts above $25 million.
Ken Griffin becomes the face: tax bill estimates and impact
New York real estate tax attorney Robert Pollack said, “This is very complicated.”
In political messaging, billionaire and Citadel CEO Ken Griffin has become the face of the tax. New York City Mayor Zohran Mamdani announced the tax in a video posted in front of Griffin’s penthouse. Griffin later responded, saying he might pull future business and work from New York.
According to CNBC calculations, under the new tax, Griffin, a Florida tax resident, would see his Manhattan property tax bill more than triple. Griffin bought a 24,000-square-foot penthouse at 220 Central Park South for $238 million in 2019. But government records show the city values the apartment at just $15.5 million.
Based on city records, Griffin's property tax for the 2026-2027 tax year is $858,332. In the first two years of the pied-a-terre tax, Pollack estimates the bill would more than double to around $1.87 million. Starting in the 2028-2029 tax year, that amount is expected to rise to just under $4 million.
In addition, Griffin reportedly bought two apartments at 740 Park Ave for a combined $83 million. The expected tax bill for those units starting in 2028 is $1.1 million, bringing his total Manhattan property tax bill to more than $5 million.
While some city officials say the wealthy can afford it, real estate brokers and tax attorneys say the impact will be significant. Pollack said, “All of my clients already feel they pay too much. These numbers matter. I don't care how rich you are.”
