New York passes pied-a-terre tax
cnbc.com
cnbc.com
One wrinkle I haven't heard much discussion of -- cities respond to incentives too. NYC is a global destination for the mega wealthy. If it turns out the uber-rich don't mind paying and this becomes a cash cow for the city, that creates incentives for the city to cater to them and try and get more uber-rich people to have second homes in the city.
The tax is reasonably small enough that I wouldn't expect a lot of wealthy people from divesting from their properties, but it's probably going to make them think twice about buying new properties.
That second-order effect is the important balancing act for any locality-based wealth tax. If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue.
France discovered this the hard way when they implemented their first wealth tax: Many ultra-wealthy people moved their capital out of France to avoid the tax, which was suspected to have had an overall decreasing effect on tax revenue from that demographic. They replaced the wealth tax with a property tax, which probably played a large role in inspiring this pied-à-terre policy.
I am generally against more taxes, but the structure of this one is quite good in terms of the incentives. If wealthy people who only live in the city part-time stay in hotels instead of buying second homes, the net effect should be to increase the cost of hotel rooms and reduce the cost of owned-housing. NYC charges nearly 10% tax on hotel stays, so recoups some of the cost there. Having property in your city mostly being occupied by people who live their full time, particularly when property is already very expensive, seems like a good thing overall.
Reducing the cost of $5M+ homes will slightly help some wealthy people who live in NYC, and there will be a modest trickle-down effect into less expensive properties. But I thought the goal was to generate tax revenue from the taxes, which wouldn't happen to the extent they end up in the hands of NYC residents.
EDIT: apparently it hits all homes over $1M, which means it will hit more homes but also won't generate revenue to the extent the homes end up being owned by New Yorkers.
You're right, I'm saying I think it is a good tax for reasons secondary to revenue. We all know NYC is going to squander the money, at least they might make housing slightly cheaper for the average New Yorker in the process.
So this is also a developer / market incentive, if it actually changes demand.
airbnb begs to differ?
the conversion goes from owned/rented housing to airbnb conversions
however, the slack is absorbed, and the airbnbs are gonna about match the actual need for how many ultra-rich people are actually in NY at a time
Here in Chicago, they're banned from certain wards
What prevents the tax following the offshoring attempts? Is it simply that the IRS doesn't have the manpower? or is there a legal loophole for avoiding paying your share that only works for the ultra wealthy?
> we'd still be on the hook for taxes for (iirc) 15 years
> Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.
Is that really needed when the homeowner vacancy rate is 1.3% in the New York-Newark-Jersey City MSA?
Historically NYC housing used to be a lot more affordable before they stopped building, reducing supply relative to demand and thereby raising prices.
This is going to raise property taxes for everyone.
The ultra wealthy can just pack up and move. It doesn't affect them in the slightest.
But in two years when the property tax overhaul is complete, the middle class will foot the bill. As per usual.
The Law of Supply and Demand is not a paradox.
It's no different than increasing the price of X causes the sales of X to go down.
Property taxes might discourage construction but if land values are high enough then property taxes approximate land value taxes.
Raising income tax on the other hand discourages working even when it is set very low. This is one which ought to be lowered if anything.
tl;dr it doesnt work the same way for every tax.
Are you serious? LVTs expressly incentivizes landlords to kick out "grandfathered in" developments and uses in favor of redevelopment and sale for that purpose.
But those grandfathered in developments and uses are exactly what made the place valuable in the first place and you need some amount of them to remain.
Citation needed (for a solid study, not right-wing propaganda from CNews/Libération). From a quick cursory look, it appears the French government had no problem raising taxes when the taxes were higher, and that the previous governments who reduced taxes for the rich setting blame on public debt have in fact increased public debt over and over. (disclaimer: i'm not an economist)
The 2025 deficit ran at around ~150 billion euros. The Zucman wealth tax would raise 25 billion in the most optimistic projected scenario (so, one sixth of the deficit at most). This is the very best case as projected by its proponents - there's a decent chance receipts would be significantly lower than that.
You're absolutely right that right wing parties did not, and almost certainly will not, solve any of these issues. Neither will a wealth tax. In my opinion, this is only solved in a bang.
Western rich world boomers have gotten a great deal - unusually stable & high growth economies, relative housing abundance, and peace during their peak working life during which all sorts of retirement related benefits were introduced.
Unfortunately many of those benefits only work in a higher population growth, higher economic growth, lower retired lifespans world that no longer exists.
Fairest? I mean, land value tax is fair. So are Pigouvian taxes. In fact they're arguable more than fair. Not having these taxes is arguably unfair. Who deserves ownership of natural resources or to inflict negative externalities on others?
Taking things someone earned through labour and not letting them give it to who they want isn't very fair.
> To deserve means to be worthy of, entitled to, or to have a valid claim to a reward, punishment, or treatment based on your actions, qualities, or circumstances
So you genuinely believe that nepo babies, despite not taking actions or creating any circumstances to earn their wealth .... nevertheless deserve to have it anyway?
As a point on terminology: That's not a really a wealth tax on the accumulated assets at-rest own by the (now eternally-resting) owner, but an income tax on the wealth as it moves to the recipients who didn't have it and are getting a massive gift.
It just happens to be a kind of gift/transfer we've decided because of tradition to consider as a special case, where (A) it happens right after a given dies and (B) the giver is frequently but not necessarily related to the recipient.
Granted, this requires lawmakers to explore more of the "exploit space" around their proposed regulations, but I don't think that's really asking a lot of them.
“Oh, that’s regressive” they will say.
Make it small per transaction. A rich person spending 100x what a normal person spends will pay 100x as much tax. A billionaire spending 10000x what a normal person spends will pay 10000x as much. And they will also be taxed if they borrow money (that’s a transaction) against assets so they don’t have to sell them.
And when someone inherits, that’s also a transaction. Money moves from one person to another. So that same tax applies.
How is it terrible for my kids to not have to break their back like I did to build the wealth I'm looking to pass on to them after I die? Why should they go through the same struggles that I did? It is up to them to squander it or transform it into even more wealth to pass it down to their children and so on. Ideally the former, but sometimes what parents dream for their children does not always come to pass.
There is nothing wrong with striving to give a heads up in life to your kids, on the contrary, it's a core, visceral instinct of parents to do so, and removing that would be alienating.
There is a certain level of wealth though, where the "heads up" transforms to an unstoppable compounding lever.
France for instance has a progressive inheritance tax (starting at 5%, up to 45%), triggered for children inheriting at 100k€ per parent. In practice, 50% of the population inherits <70k€.
Also, the proposed Zucman tax in France for instance is triggered starting at 100M€ wealth. At these levels, a mere 2% risk free investment yields 2M€ annual income, this is enough to both compound and enjoy a very luxurious lifestyle. This level of wealth is unstoppably compounding, and that is why it is proposed to tax it.
If you don't, well you end up with a US situation, where disproportionate wealth (and thus power, influence) end up in the hands of random citizens with their own agendas, possibly (likely) orthogonal to the interests of the majority.
I also went to give my children the world, but giving them a few million when they're about to retire doesn't really do much.
parents wanting to support their kids should do things like pay for college or a trade school, cover their grandkids daycare costs, help them buy their first home. We charge young parents so much money they don't have, and, much like covid, only seem to cater to old people for whatever reason. I guess because they have the money.
On the other hand, most people die closer to 75-80 and their kids are 50+. Leaving inheritance to them isn't really spoiling them as they are alread adults with established lives.
I don't care about estate and inheritance taxes much but many people do and it empirically drives behavior.
I might live till 72, my kids will be my age right now when they hit inheritance instead.
That's not a headstart.
Inheritance is, notably, not earning it.
> continue do productive work
That's a pretty bald assertion. Useless nepo babies abound.
> relying on public largesse
Any chance the existence of a stable, well-educated, high-trust society benefits the children of wealthy people at all?
There's just too much fun to be had with 0.1% wealth that you didn't have to sacrifice your 20s, 30s (and maybe 40s) to build. Coast at some job with a top 25-50% income and 0.1% inheritance in NYC and live the life.
Useless non-nepo babies abound. Useless rich people abound. Useless poor people abound. And?
So what taxes aren't "morally wrong"?
Consumption tax is sales/VAT tax excluding some necessities and capital goods. Yes, there are some awkward edge cases: in the UK the exclusions were food and children's clothes, which leads to battles over prepared cold food (e.g. sandwich), takeaway and restaurant dining.
Sin taxes are obviously things society might want to discourage, mainly for health reasons, like alcohol and smoking, but also gambling and externalities, like pollution. Some might stretch that to all carbon emissions to moderate climate change.
Don't tax things you want: working / income and investment / capital gains.
Inheritance tax is doubly wrong because the wealth is already taxed, and death is unavoidable (but emigration is possible, which might help in some countries).
Taxes on somebody else.
Tariffs, various usage taxes and fees.
Need a mechanism to address the regressiveness of some of this but that's an implementation detail.
Capital gains taxes, on the other hand, are completely moral, and should be much, much higher. Capital investment benefits enormously from the State protecting their property "rights" (you don't need to hire a private army to prevent the workers from just deciding to run your factory for their own benefit, that's what the cops are for), and at a minimum the state would be justified in collecting that dividend for itself. Bootlickers and profession bootlickers (i.e., economists) would complain that a high capital gains tax disincentives investment, but as long as the value of investment is positive, that is, outpacing inflation, it makes zero sense to let your money languish in a Scrooge McDuck pile rather than get some value out of it.
Inheritance taxes tend to only kick in at the 8+ digit range.
If anything, taxing that should encourage descendents to do productive work, eh? Since not taxing it, but taxing other things actually discourages it?
I can’t imagine how it would result in anyone relying on public largesse either unless they are really terrible with money. In which case a few extra zeros is unlikely to help any?
Or look at monarchies and titles of nobility. In the past direct inheritance of political assets was common, and acting on that natural desire, the people involve claimed that parents deserved to direct what they (and their ancestors) had accumulated on to the next generation of their own family.
Yet nowadays most countries and people have decided it is immoral, and they also took steps to make common forms of it extremely illegal.
My point is that economic inheritance today is just as much a social-construct as political inheritance was then. It exists because we permit it to exist, don't be fooled by anyone claiming it's an intrinsic law of the universe or a divine mandate by god that must be obeyed.
But the individual would be a subsistence farmer at best without society supporting it, hardly worth taxing. In reality millionaires are only possible with a large state and societal network around them. Wealth is societies gift, and its right to take back.
It's misleading to cite that since it basically never happens.
The tax doesn't even come into the picture for fortunes below $30 million dollars (for two parents), and the rest of the time it averages ~14%.
https://www.cbpp.org/research/federal-tax/the-federal-estate...
The only tax that is fair to everyone is a sales tax.
When I was little and playing SimCity 2000 I looked at the tax rates for the city and noticed that the sales tax rate was like 2%, and based on our 14% VAT at the time, it seemed super low to me so I upped it to 12% and was surprised at how unhappy the citizens were.
This gave me the impression that Americans wouldn’t be happy with a significant sales tax, or perhaps this was a city sales tax on an existing state sales tax, which yes, would be outrageous, or maybe Americans get taxed in some other way which makes up for our VAT.
Anyway, I look back and chuckle at my own lack of knowledge at the time.
Americans are stupid. They see a higher tax on an iPhone they don't need, they will cry about it.
But they pay more at the end of the year on income tax, property tax, car registration, etc., they could care less.
Most Americans don't even look at their pay stub, and are more than happy to overpay their income taxes every paycheck so they get a bigger tax return at the end of the year.
They don't realize that money was theirs to begin with.
They complain about not being able to become wealthy while they give the government an interest free loan, when they could be investing that money and earning on it.
A book review, but contains enough information to be an interesting read.
Is that the stated goal? I thought the goal was to generate revenue from the tax. It's true that triggering sales will create a one-time boost in sales-related taxes, but that's just temporary.
There is a difference between property-as-primary-residence and property-as-secondary/tertiary-residence or property-as-proxy-for-parking-money.
Property taxes handle the first scenario, wealth taxes handle the latter.
The landed gentry want you to believe that they can't be touched unless you're willing to kick your grandmother to the street, but we can absolutely write taxes that apply more narrowly, and sensible tax policy leads to better outcomes and fewer market distortions than hamfisted regulation.
* https://www.toronto.ca/services-payments/property-taxes-util...
Anyway, NYC real estate taxes are a mess and in some cases regressive.
For example, taxes are based on values set by the city which for the ultra high end, the are understated by an ORDER OF MAGNITUDE..
See: > Griffin purchased his 24,000-square-foot penthouse at 220 Central Park South in 2019 for $238 million. ..t he city values the apartment at just $15.5 million .. property tax bill for the 2026-2027 tax year is $858,332
.. Griffin’s property tax bill would more than double to $1.87 million .. in the 2028-2029 tax year, it would increase to just under $4 million
I don't feel terribly about someone paying $4M on property probably worth close to $400M at the moment. Normal high income NYers already pay $10-20k/year on properties worth $1.5M by comparison.
Another regressive aspect there was a proposal to change was a purchase tax for cash purchases. Currently one of the closing costs in NYC/NYS is a mortgage recording tax of nearly 2% of mortgage amount. This means if you are rich enough to buy in cash, you can avoid this tax. And if you are a rich cash buyer you are probably buying a higher end property so.. doubly regressive in a sense.
Or show me a worker who benefits the same amount of money from the city being improved.
lol. why would it? if you tax something, you get less of it.
there is not even close to any kind of shortage of demand for housing in NYC. there is an enormous shortage of supply; it is in fact _illegal_ in most places to build more supply.
> that creates incentives for the city to cater to them
What does that even mean? If catering to the wealthy was profitable, everyone would do it. Just look at Dubai, it's built entirely around that model, and it's a brutally competitive space. NYC attracts the mega-wealthy for a different reason: network effects. Meta-wealthy come to be around other mega-wealthy people.
It's a barrier for low income people to buy homes.
Sales tax is a workable wealth tax.
> State lawmakers on Wednesday passed the tax on nonprimary residences in order to help close the city’s budget gap. The so-called pied-a-terre tax will be imposed on second homes valued at $1 million or more. It’s expected to raise $500 million in revenue.
> Details on the tax obtained by CNBC show that the property tax would take effect in two different phases. In the first two years – the 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. Properties worth between $1 million and $3 million will face a 4% annual tax; properties valued at $3 million to $5 million will face a 5.25% tax; and those above $5 million will face a 6.5% tax.
The rates sound a bit steep (although I'm not familiar with the baseline tax rates on properties of that value) but the principle is sound. In the UK, the equivalent tax on housing is council tax, and local councils in Great Britain (but not Northern Ireland) are empowered to double the rates of council tax on second homes.
"While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said."
It also mentions they plan to adjust property valuations in coming years, and when the valuations go up the rates will go down:
"After the valuation adjustments ... properties over $25 million will be taxed at 1.3%"
I dunno, 1.3% of the actual value seems.. not at all unreasonable? I live in TX and that's about what my property taxes are, for a property valued at several orders of magnitude less than any of Ken Griffin's NYC properties.
EDIT: As mil22 pointed out, this 1.3% tax is on top of the existing ~1.8% NYC property tax rate, so it's more like ~3.1% total.
Bear in mind, it's 1.3% on top of the existing ~1.8% average NYC property tax rate, so it may still be comparatively expensive relative to TX property taxes.
That's as may be, and for residents of NYC that's impactful.
The new law targets second homes, which are generally defined as a residence which is not your primary residence. Meaning that the folks affected are generally not NYC (and often not NY state) residents, so the NYC/NY State income tax is irrelevant, as the folks affected don't pay those income taxes.
Very interesting to know. Many readers may not be aware that council tax in the UK is quite regressive and tops out at ~£4-5K / year on properties valued higher than ~£1M. So you can own a £5M GBP house and still pay only £5K / year for an annual effective property tax rate of just 0.1%.
This is one of the reasons buying a luxury house in the UK is comparatively quite cheap in terms of total cost of ownership compared to many states in the US where you have to pay much higher property tax rates, insurance, and so on.
So even if the council tax is doubled on a second home, you still might be paying only 0.2%. Compare that to an average property tax rate of ~1.8% in NYC (before pied-a-terre).
Nothing, absolutely nothing do we have to adjust to America, neither up or downwards.
That being said, and as much as I think Mamdani is an Ideologue, taxing second, unoccupied homes sounds absolutely reasonable (at least if they aren't rented out). Expect all kinds of shenanigans to circumvent this, but still.
Council tax is difficult to compare to a percentage based property tax - the band based system means people in super valuable homes pay virtually nothing, at least relative to the value of the property, and each of the ~8 bands pays a fixed fee - once in the max band the tax stays the same no matter how valuable the home.
This is especially acute in places like Scotland, where the top band kicks in at anything over 212,000 and hasn't been adjusted since 1991... Essentially any new build starter home in many places will automatically be in the top band and taxed the same as some dude who bought a castle for millions.
Personally I've never thought of council tax as a property tax, even if the bands superficially are linked to it- the link to underlying property values is so broken now.
My first rented flat outta college was taxed at the highest band, and I sure wasn't rich then. It's widely argued to be a very regressive form of taxation - its opponents indeed argue it should be replaced with an actual property tax.
Agreed, but you also have to keep in mind that those people don't pay NYC income tax.
A new house costs at MINIMUM $400k to build (in New York state, not to mention the city).
There are around 100k pied-à-terre in New York CITY alone.
There are about 350k homeless people in New York city.
Taxing all of those secondary 'homes' at 40k would and spending those taxes ONLY on new housing construction would yield at MOST 100k houses (per year).
So I was incorrect in what was more efficient IF taxes only go to building new houses... which I AFAIK is not accurate to how those taxes would be distributed. (it may still be better if enough revenue is going to housing dev).
So a ~10% tax rate for SECOND+ homes is still too small considering how many houses we need to build. I argue for 100% tax: pay that price every year if you want a SECOND+, that would completely offset a new house in compensation for tying one up).
If you are rich enough to afford a vacation home: you pay vacation prices. You don't get to use it as an "investment vehicle" we need to dissuade that mentality completely.
I heard about a system for this that struck me as brilliant. Make someone declare the value of their property. Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost.
TADA.
And if someone wants to artificially inflate the value of their home, to reflect the difficulty of moving out, finding a new secondary residence, etc, then that's their business. No worries. We'll tax that additional value, no problem.
I think this system goes back thousands of years. Why not use it?
It dramatically cuts housing security, and allows local governments to inflate their own property values by doing what is basically eminent domain without the requirement to show need. Make everyone pay taxes, use those to buy up homes, re-list the homes at a higher price. They can effectively price gouge using tax dollars. This could happen to you at literally any point, and that local government doesn't care if the house won't even sell as long as the other houses rise enough in value to cover the lost tax revenue.
I've also heard the same thing but allowing private citizens to buy them, which is almost worse. Anyone sufficiently well off can just wreck someone else's life. If I hate my neighbor and they report the real value of their house, I can force them to sell it to me so they have to move and I can resell it while only losing fees in the process. They would have to over-value their house by an amount that I'm not okay losing, which ends in a sort of auction of escalating values. At the very tippy top, if I'm Warren Buffet's neighbor there's probably not a value I can pay taxes on that would stop him from buying me out if he wanted. Any number that would be a meaningful loss to him is something I can't even pay the taxes on.
Now that I've explained that, do you still think this would "dramatically cut housing security"?
If you still feel this would make housing "insecure", because someone's secondary home, if it has a value over $1 million, is subject to this system I propose, then you and I have a fundamentally different idea of what "housing security" is.
On one hand, we're talking about taxes large enough to be multiples of a public official _per home_. Open bribery is an option, but there's also the potential to push some money into campaign funds for whoever controls the department in control of this and then under-valuing the home by a huge margin. The home valuation is subjective here, so there's no perjury for under-valuing your home by a huge margin.
The other side of this is more brazen, but would involve someone having some kind of influence over the government official that makes buy/not buy decisions, intentionally over-valuing the home, and then having the government buy it.
I also just don't really understand the point. In order for the government to make sane "buy or not buy" decisions, they have to know what the house is worth on the open market. If they already know what it's worth, why not just tax that value and skip these hoops? If they don't know and can't find that number then this policy is going to be a crapshoot because they don't know if the home owner is undervaluing the home or if that's what it's actually worth.
At least as important, this scheme is trivially exploitable for corruption and weaponization by government officials in countless ways that don't currently exist. This is not something that anyone should want to enable.
A secondary home over $1 million in value also has overt pathological economic characteristics. Especially if the taxes paid on it are tragically low.
> This forces the owner to write a long-term call option on a non-commodity asset without even collecting the offsetting risk premium expected for such a call option.
Eminent domain already exists.
> without even collecting the offsetting risk premium
You get to have a second home, in New York, with a value of over $1 million.
Yes, I'm proposing taxation and regulation on top of that.
But, knowing this law exists, everyone gets to make the choice whether they want it or not.
We also have the legal mandate to institute taxes in the first place. You also did not collect an offsetting risk premium for that, and had no right to expect one.
> This puts the asset permanently underwater by construction
Eminent domain already did that. And you're saying "permanently," but I think you could fairly easily steel-man my proposal to say that the government has a certain number of days after property taxes are paid to declare their intention to collect. That's different from "permanently."
I'm not an expert, by any means.
But you also just described what buying a house in an HOA is like. You have no idea what future fees will be like. And you have very little control. And many HOAs can foreclose on your house, if you don't pay their fees. John Oliver did a whole segment on it. And something like 80% of new home construction is under an HOA.
So, why should I have an over-abundance of sympathy for people, with a secondary home, in NY City, worth over $1 million?
Maybe the whole concept of a secondary home over $1 million in value, in New York city, should just not exist?
Or, maybe it should exist, but the taxes should be pretty damn high, and they should be based off of a pretty damn fair assessment of value. I'm all open to counter-proposals of how to get a more equitable assessment of value.
People's brains have been utterly broken by envy and combining the 'M' word or the 'B' word as the magical milestone causes them to lose all sense of scale. One needs to be well-off to get in that situation without inheritance, but it is more 'doctor or lawyer' levels of money. Hardly a level reserved for an aristocratic elite.
I think someone has to be fairly elite to have a secondary, or tertiary home, in NY City, worth over $1 million.
Regardless, the entire point of this discussion is that people who have a secondary home can probably afford to pay more in taxes than other people can. I don't call that envy.
That's just a frank discussion of tax policy.
If you think taxes should be lower, because some government programs should be reduced, that's a perfectly fine discussion to have.
If you think governments shouldn't have to worry about a balanced budget, and maybe they should default on their debt (which is an argument the current President has insanely floated), that's a fine discussion to have.
At present, we're talking about secondary homes with a value over $1 million, in New York City, having an additional 4% tax.
And I was lamenting that home valuations appear to be unbelievably low, which would dramatically reduce the tax income of this law, and I was trying to propose a fix, for those homes.
If you think the only reason to have that discussion is because of envy, then I think you're not being fair to other people's motivations.
Your "gish gallop" and "justifying antisocial behavior" dismissal is almost literally how creationists dismiss discussions of evolution.
Because we're a democracy, we vote, and we might vote for foolish policies unless you take the time to explain to us, in language we can understand, why they're a bad idea.
It sucks that the burden is on you. I don't deny that. But the burden is on me to explain why electronic voting (without a paper trail) is bad, that climate change is real, that vaccines are essentially miraculous, and wearing a mask during a deadly global pandemic is a good thing.
And there's certainly a lot of people willing to use fancy terms to defend cryptocurrencies, but honestly, that doesn't mean they're right.
We all have to do labor to keep the electorate informed.
It is very common to have goods where the price a buyer is willing to pay is smaller than the price a seller is willing to accept, and in a free market that simply results in no transaction happening. Forcing the transaction to happen is always going to make at least one side of the deal unhappy.
And if the difference is more than X% then it’s fraud unless you can persuade a judge otherwise.
The loophole might be that Billionscorp LLC is listed as the property owner, and Jeff Billions technically only rents the penthouse from his own company, which lives forever, and never has to sell up. Closing that loophole by banning corporations from owning residential property would do everyone a favor.
It would also complicate the home buying negotiation. People would look at your recent tax payments and put a cap on the bids they would make based on what would trigger back taxes for you.
You are right to imply that it seems unfair if you discover in year 49 of your happy 50 year tenure that your Queens bungalow was built on top of a seam of pure gold nuggets all along.
Also, most municipalities do not have the funds on hand to buy up people's houses just to call their bluff on taxes.
The only way to end up with a loss is a coordinated attack by owners and potential buyers: to intentionally understate the value, and then to hold off ANYONE attempting to purchase before the market sale price is below the compelled price. So multiple rich people lose their houses in a naked gambit to bankrupt the government. I mean... I guess it could happen? But at that point, it's open class warfare.
Isn't that what got Guatemala invaded back in the 1950s?
Uhh... what? How is this not an insane system?
1. You give an accurate, good faith projection.
2. Government taxes you.
OR
3. Repeat.
1. Property is taxed at correct rate (win)
2. City buys property at low cost (win)
Nope, that's not in the rules. It's up to their discretion.
It seems like you agree it would be bad for the government to be able to buy your house when you give an accurate assessment. So why not design it out of the rules?
> It seems like you agree it would be bad for the government to be able to buy your house when you give an accurate assessment.
You're thinking about this wrong (as is the person you were replying to). The whole point of this system is to define "accurate assessment" as the break-even price where you could take or leave being bought out. That's how much the property is actually worth to you. Not some estimate of the aggregate market price. By definition, it's value to you is greater than or equal to the market price because if it's lower, why haven't you sold already? In other words, the idea is not to tax market price, but "market price + consumer surplus".
Note that because everyone's valuation would go up, this should be paired with a reduction in the tax rate.
Not exclusively though, right?
Since they are revising the valuation system to not artificially depress valuations, isnt this a global tax increase? No rate changes or extra tax for someone with a primary residence but the base is increasing, right?
>While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
>Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate.
Ken Griffin spend 183 days a year in Florida, so he pays no NY state or NYC income tax. He does pay ~1.8% income tax on his $238 million home though. Now he will pay significantly more. (His property is also assessed at a far lower number.)
I think the revenue is probably overstated in the long run as people will find a way to offload the properties except for a select few who will consider a cost of doing business.
Also a great marketing move by Mamdami in terms of walking his talk.
Edit: You start somewhere and keep tightening the policy ratchet as loopholes or other policy leakage are detected. You've found a clever hack? Congrats! The law is updated accordingly.
The ones who will be hit are those who do not have the legal frameworks in place to erect such structures - Joe Homeowner who inherits grandmas city house, both worth slightly above the magic 7 figures.
> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
Not so fast.
1) It is complicated. It has progressives rates that start out higher for 2 years then decreases but coincides with how the base is calculated.
2) The budget projections assumes no behavioral changes from the taxed residents. This doesn't seem like a safe assumption. You should at least assume some amount of the tax base leaves since it disincentives 2nd properties.
This doesnt mean its a bad plan. But it's definitely not the least complicated tax law. I'd say thats more like sales tax or something.
2) good. The more people who are in the city the more actual sales tax and other revenue is generated.
Edit: Actually, as a property tax of nonprimary residences, is this not also effectively also a Landlording tax? Will my landlord's tax bill go up because he's not residing in my building, if my building is above the threshold assessed value of $1mm? Or are >$1mm "multi-family homes" (significant % of housing of New Yorkers in BK/Queens) exempt and this only applies to condos?
But you’re right, the tax would have to be much more punitive to crossover into the red.
If it does make it more challenging to justify the business of being a landlord, I’m all for it though. Steps towards the end goal of more New Yorkers who want to owning their primary residence.
This is also some opportunity for intra-state and intra-city arbitrage where random cities and states lean into the controversy and start offering tax incentives for the "sad" and "offended" egos of wealthy of NYC to move there. That often happens to companies, where states, sometimes down South offer such "deals" to move company headquarters from higher tax states up North.
But at the same time, this might encourage some wealthy people who "fled" to Florida to return back and make New York their primary residence.
I also see slew of loopholes popping up, couples divorcing so each can claim on of the residences as "primary"
>Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate.
Hold on a second. Reading between the lines, this means everyone's property taxes are going up, right? Because the valuation system is being revised to more accurately reflect resale value.
Obviously this would affect more expensive properties more. But I havent seen anyone acknowledge that everyone's taxes will increase. Is that because I have the details wrong or because it's just flying under the radar?
I jest.
Im not sure you understand what Im saying though. Wouldnt normal people's taxes go up because the appraisal changes are global? Say, a primary residence bought for $750k.
No. Our town finally reassessed everyone after not doing it since before COVID. Assessments doubled and everyone freaked out, but the tax levy didn't change, so the amount of actual tax basically didn't change; $160M in taxes for 20k people is still $160M in taxes for 20k people. People just now pay less tax per $1k house value, but for higher house values.
From what I see its 20% of the assessed value in NYC (which is currently significantly lower than market value).
it's flying under the radar because people don't read these things and critically think about them.
as per usual, the middle class will take the hit. the people that voted for this will become poorer, and the wealthy will go on as normal.
> It is unclear how DOF will treat properties owned by LLCs and trusts. In general, these owners are not considered residents. However, this does not mean that the properties are not used as primary residences. For instance, based on publicly available information, Mayor Bloomberg established his primary residence in two adjacent buildings on the Upper East Side, one owned by an LLC, and the other a cooperative apartment corporation. It may be possible for some LLC owners to rent to themselves and avoid the tax.
Sounds like something worth addressing as a second phase!
They can also split the property into multiple independently owned properties that just so happen to be right near each other, each just under the limit.
Wild that there are so many rich people in NYC. Truly an engine of wealth creation.
If that argument holds up in court, we are all screwed.
But they just repealed that system so no more property tax but you can also no longer deduct mortgage interest from your taxes. So now the system favors people that don't have loans.
That with laws against foreigners buying property (most of Switzerland - not in some economically under devised areas though) the hope is the cost of housing will go down.
If land property taxes were wealth taxes then you'd be able to deduct e.g. mortgage debt when applying the tax rate.
In this regard, property taxes in the US largely make sense.
I suppose in Ken Griffin's case, even if his residence is owned by an LLC he controls, he is known to reside in it. But how effective is this legislation when the purpose of LLC ownership is expressly anonymity and accounting convenience?
Unfortunately, doing that is very unpopular. Unpopular enough that we see states trying to get rid of property taxes, and those providing limits to increases, which basically guarantee misallocation and rising prices. But what is economically reasonable and what the voters like have very little to do with each other.
Source? With all the ruckus DOGE made, they just couldn't find that many inefficiencies. They ended up cutting marginal things just to look good (to their fans, who think 5M a year to keep Ebola at bay is too much).
As their taxes have been steadily decreasing over the past decades, the rich kept getting richer, now owning most of the wealth in this country, and with that everything is turning to shit. There's less and less money for stuff that matters (education, health, infrastructure...) and more and more for the pedophile oligarchs to buy media companies and politicians. Redistribution is the only way out of this crisis.
Stocks should be bought and sold, period the end. That is how the market is supported to work.
If you closed this simple loophole, you would see a massive amount of tax revenue.
Is there a better way to think about this?
By comparison, I have an investment property that's worth about $285k, and I pay 1.97% (about $5,800) on that in annual property tax, so esp. considering he's in Manhattan, that rate looks like a bargain.
Its very roundabout as NYC can only make taxes for NYC, but the net aim is to increase the effective tax rate for the ultra-wealthy, using secondary property as a proxy for that.
Edit: AND WE (I) LIKE THIS because progressive taxation is the core play of fixing income/wealth inequality
There is plan to add to the housing stock as well: https://www.nyc.gov/mayors-office/news/2026/05/mayor-mamdani...
He is also aggressively going after landlords withholding repairs, maintaining dilapidated units, etc. and thus tackling the quality of the housing stock problem.
So he'll move to a higher office and leave his messes for the next sucker.
I guess three-pronged, cause it says if they turn it into a rental that it's exempt from the taxes, which means someone is still at least living in it rather than just being used as a speculative asset.
??
The point is to raise revenue.
In some sense, City is calling the bluff of these deeply immoral rich fucks; the tax is incredibly affordable for them, and almost all of them will simply complain and pay it, and thus generate revenue for the City.
If that is your starting point, I don't think you're going to approach tax policy rationally.
Ken Griffin may be deeply immoral -- I don't know -- but it's not a condition of being rich.
Yep, I'm sorry -- I was very confused here, sorry for the not-very-useful initial post.
It is. Increasing the housing supply[0] is a different initiative.
[0] https://www.nyc.gov/mayors-office/news/2026/05/mayor-mamdani...
And it does not explain how the current system arrives at such low valuations.
This is part of the reason we have a housing shortage in the US: 20% of available homes are purchased by investors, which squeezes the supply.
Airbnb has made this worse. There are areas near me where during the COVID ZIRP, people snatched up like 70% of the homes to turn into rentals. Those places are now ghost towns, unless it's Memorial Day weekend.
“Some of the supply of housing that is permitted to exist is used a short-term rentals rather than as actual housing” may be “part” of the problem, but its a vanishingly small part, in that if you deal with the basic building problem, there would be no actual problem, even if the short-term rental thing continued.
Actual title is "New York passes Mamdani’s pied-a-terre tax"
Why's there an obsession with the $1m cutoff?
The dollar has been turned to dust. $1M is not that much money, especially in housing, especially in NYC.
Why tax $1m second homes and not second homes generally? Effectively, you're going to tax almost all second homes.
So why the arbitrary cutoff?
Chicago wanted to add a "millionaire's tax" on $1m+ home sales. At least in Chicago, that isn't effectively taxing the vast majority of housing (and total value) - so there's some distinction worth having.
> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
It's.... problematic to say the least. Say you bought a bungalow for €30k in the 2000s that you frequently visit to escape the city. You are a middle class worker, it's paid off and monthly costs are minimal. It is now worth €350k. You need to pay €7700 a year. Most people don't have that type of money so they are forced to sell.
This is $1mil in assessed value which would translate to roughly $5mil in market value.
In NYC $1mil market value is pretty much the starting price for a 1-bedroom condo in a gentrified area. $5mil market value, on the other hand, is a pretty luxurious place.
Hardly everyone understands 'owning a house' as millionaire-level wealth. Which is why people cheer the policy on until they realize it is them who is being shaken down.
Owning a house where your equity in it is over a million is absolutely wealthy.
In the US itself (?) lol
I disagree with the comment and entire existence of the person to whom you are replying, but they aren't wrong about $1m actually not being as big or watershed a number as it used to be.
A basic middle-class house in just about any part of the country that's worth living in is going to be $1m, plus or minus 200k.
Help me understand your comment. Do you think the country is only made up of like, 3 big coastal cities? Do you think the only houses worth living in are several thousand square feet in only the coolest parts of town? I want to understand what you think the country actually looks like, here.
I'm not coming at this from a rural perspective. I live in the greater NYC area. I have friends in NYC. They make a lot of money and live very close to Grand Central, and even they don't live in $1M properties.
Only ~30% of home owners own their outright.
~60% own 40% of the house or less.
I'd argue that you can't own more than ~92% of a home, because it costs a lot to sell a house...
The "average" homeowner moves every ~7 years in the US, and this is heavily skewed to people with less equity - the people who outright own typically have stayed put 20+ years.
So "owning" a million dollar home means anything from: you put 3.5% down, and you're currently underwater cause prices went down in a lot of the US (i.e. you are literally own NEGATIVE equity)... to you actually have $1m in equity.
I "own" a $1.2m home. I really only own about $425k of it. If I had to sell it, that typically costs close to 9% - so I'd be lucky to get $300k.
The person underwater who put 3.5% down on a home could easily have -$250k if they had to sell... So the idea that everyone who "owns" a $1m house is "rich" is a bit strange...
I mean, in general, people who "own" $1m houses are not destitutely poor, but that's about as far as you can extrapolate.
You can put 3.5% down for a $1m house in places where ~50% of the population lives.
At current interest rates, no, you can't qualify, but at interest rates where people bought most of these houses... Yes, the median person could afford it (in those areas).
> The primary residence of at least one owner.
> The primary residence of a parent or child of at least one owner.
> Cooperative and condominium units that are appraised at less than $5 million in the previous three years.
> Properties and dwelling units that are rented to a NYC primary resident.
(https://comptroller.nyc.gov/reports/the-pied-a-terre-tax-and...)
I think this is because the term "millionaire" is a catchy term. And that caught on in the 1800s.
Thinking stuff like healthcare, education, housing, public transport, cycling infrastructures or even law enforcement.
https://www.bostonglobe.com/2026/05/25/metro/millionaires-ta...
This tax may make it more attractive to own a second home there, because it proves you're not one of the fake-wealthy who can't afford the price.
I live in FL so if you have questions about insurance feel free to ask.
But in all seriousness, they all already own homes in Florida.
Are we going to see things classified as not-residences, but then people can vacation there anyway, much like Mar-a-Lago supposedly cannot be a residence, but apparently President Trump lives there and votes there, anyway?
that is how it was designed, it only applies to people who are ineligible to vote in New York City, there is no way to push back.
As such, it's really quite disgusting, abuse of power motivated by pure greed, violating literally the founding democratic principle of these United States.
Our tree of liberty needs watering.
(I do not have to pay this tax, but I am a principled person)
> New York passes Mamdani’s pied-a-terre tax. Here’s who pays and how much
(The submitted title at time of commenting is "New York Passes Tax on the Ultra-Wealthy)
It's a tax on second homes. If you thought it was a wealth tax from the editorialized title, like I did, that's not correct.