New York’s Pied-a-Terre Tax Is Now Law
New York state lawmakers have approved a new tax on non-primary residences in New York City, CNBC reported Thursday. The so-called pied-a-terre tax targets second homes valued at $1 million or more and is projected to generate $500 million in annual revenue for the city.
How the Pied-a-Terre Tax Works
The measure rolls out in two distinct phases. During the first two tax years — covering 2026-2027 and 2027-2028 — rates are applied to city-assessed valuations. Properties assessed between $1 million and $3 million face a 4% annual levy. Those in the $3 million to $5 million band pay 5.25%. Any property assessed above $5 million is subject to a 6.5% rate.
Experts caution that the city’s valuation methodology is notoriously outdated. Assessed values often represent just 10% or less of actual market prices, significantly softening the immediate blow for owners.
The System Gets an Overhaul in 2028
Starting in the 2028-2029 tax year, city valuations shift to a comparable-sales model, dramatically lifting assessed figures. Rates fall sharply to compensate. Properties then valued between $5 million and $15 million face a 0.8% rate. The band between $15 million and $25 million carries a 1.05% rate. Anything above $25 million is taxed at 1.3%.
New York property tax attorney Robert Pollack of Marcus and Pollack LLP told CNBC the structure is “incredibly complicated.”
Ken Griffin Becomes the Tax’s Unofficial Poster Child
New York City Mayor Zohran Mamdani filmed a campaign-style video outside the Central Park South penthouse of Citadel CEO Ken Griffin, using it to announce the policy. Griffin, a Florida tax resident, responded by warning he would redirect future business activity and job creation to Miami.
Under the new rules, Griffin’s Manhattan property tax burden is set to rise sharply. His 24,000-square-foot penthouse at 220 Central Park South cost $238 million in 2019. The city currently values it at just $15.5 million, producing an annual tax bill of roughly $858,000. The pied-a-terre tax pushes that figure to approximately $1.87 million in the first phase. By 2028-2029, CNBC’s calculations put the bill for that unit alone at nearly $4 million.
Griffin also holds two apartments at 740 Park Avenue, purchased for a combined $83 million. Those units add another $1.1 million in annual tax once full valuations kick in. His total Manhattan property tax exposure across all holdings would exceed $5 million per year.
Real estate brokers and attorneys say many wealthy clients will experience significant sticker shock even before the 2028 revaluation takes hold.
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