By Miguel Mike Medina
Photo Credit: Victor J. Blue/Bloomberg News
New York’s tax on wealthy second-home owners is set to take effect.
The “pied-a terre tax” got passed by New York City Mayor Zohran Mamdani.
The plan targets homes worth over $5 million that are owned by people who don’t live in New York City. It’s all set to begin on July 1st. Noble Black, a real estate broker with The Corcoran Group, joins CNBC’s ‘Squawk Box’ to discuss New York City’s pied-à-terre tax and its impact on the real estate market.
“We are seeing an impact,” Black said. “We’re certainly seeing some people pull back. It’s not across the board. It’s not everybody. But we’ve definitely had some buyers pause transactions. We’ve had buyers that were looking and decided to put a kind of a pause and make them back, but they may not.”
Decisions like this definitely impact real estate, and for people who live in states such as Florida, Connecticut, and New Jersey, who have to pivot on buying properties. It’s going to be a challenge in real estate for the next couple of years. The market value has been quite a process, and for some, difficult to understand and comprehend economics.
“Originally, when they floated it, it was over $5 million,” Black said. “Yes, they were going to use the assessed market value by the New York City Department of Finance. That’s vastly different from the actual market value. So when they did 5 million, they realized that, I think, three properties in the city had assessed values above 5 million. So they scraped that. Now it’s going to be for the first two years until July 28th. It’s on properties that have an assessed market value of over $1 million of over $1 million.”
Here’s the breakdown of how things will look in the next few years:
Phase One – Condos and Co-ops
Tax Years: 2026/27 and 27/28
Property Value: Annual Tax:
- $1-$3 Million 4.00%
- $3-$5 Million 5.25%
- Over $5 Million 6.50%
Phase Two – Starting 2028-29
Market Values Based Upon Comparable Sales
Property Value: Annual Tax:
- $5-$15 Million 0.80%
- $15-$25 Million 1.05%
- Over $25 Million 1.30%
For many people, this seems like a great decision by the city. Many people want to see the wealthy get taxed.
“What’s getting pressed is everyone saying, ‘oh, we need to tax the wealthy, the people that are fleeing to Florida, but you’re picking up all of those people,” Black said. “So a lot of my best clients are people who were never in New York.”
Miguel Mike Medina is the publisher of The MMM Journal. He can be reached at medinamiguelmike@gmail.com and themmmjournal@gmail.com
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