It was an eventful week for the NYC Pied-à-Terre Tax. It started with the City publicly identifying 31,000 properties (and their owners) that might be subject to the tax—more than triple the initial estimate of taxable properties. What followed was substantial backlash, including particular criticism regarding the City’s truncated exemption application timeline. Although Mayor Mamdani initially defended the timeline, the City ultimately extended it.
(Much) more detail below the fold.
Bloomberg Law: NYC’s Initial Pied-à-Terre Tax Roll Far Exceeds Early Estimates
More than 31,000 properties are potentially subject to New York City’s new pied-à-terre tax on second homes, according to data published Friday by the city’s Finance Department.
City and state officials initially estimated that roughly 10,000 properties would be subject to the tax when it was passed in May. The city began notifying property owners of their potential liability on Thursday.
Bloomberg Law: NYC Officials Cast Wide Net to Find Second Homes Subject to Tax
The preliminary roster released July 24 includes around 31,000 homes, most of which are condos and co-ops that are classified as Class 2 properties. But many of them won’t be subject to the tax, upon closer inspection, because they aren’t worth enough or are eligible for other exemptions, said Adrian Diaz, a senior attorney at Hogan Lovells Cadwalader.
“My initial impression is that it’s extremely overinclusive, and it’s really going to create a lot of confusion for people,” he said.
Wall Street Journal: Homeowners Say Mamdani’s New Tax Rollout Wrongly Targets Them
The tax is meant to apply to people who maintain second homes in New York City that are worth $5 million or more. Mamdani has celebrated the tax—approved by state lawmakers in May—as one of the ways the city will tax its wealthiest residents to fund some of the mayor’s signature affordability promises, such as city-owned grocery stores and free buses.
But the rollout has been messy so far. Some New Yorkers say they are being falsely targeted, and that the process for proving that a property shouldn’t be subject to the tax is difficult.
The city’s recent release of a list of property owners who may be subject to the additional surcharge sparked outrage from some residents for including owners’ names, addresses and the valuations of their home.
The list also encompassed a greater pool of owners than those who will ultimately be taxed—about 960,000 properties out of roughly 3.7 million units in the city. Gov. Kathy Hochul’s office previously estimated that the tax would apply to only about 10,000 second homes. That discrepancy has caused widespread frustration, with many New Yorkers accusing the city of taking a sloppy approach and lacking transparency about how they decided which properties were subject to the tax.
“It’s now a question of whether city government can administer a major new tax competently and fairly, and it’s looking like the answer is no,” said Republican City Council member Frank Morano, whose own house is on the list.
…
Submitting the documents to apply for exemption isn’t particularly difficult, but the fast-approaching deadline to get off the tax roll adds some challenges, Groome said. Elderly people may have a hard time navigating the online platforms, and many are scared that they will end up stuck with the bill.
Adding to the confusion, letters told homeowners they have until Aug. 21 to submit an exemption application if they live in a townhouse or condominium, and until Aug. 24 if they live in a co-op. But officials have also said that the city’s tax commission will accept appeals until March—the final deadline for homeowners to get themselves off the pied-à-terre tax roll.
Bloomberg Law: Mamdani Stands by Pied-à-Terre Rollout Despite Backlash
Mayor Zohran Mamdani defended the rollout of a new tax on highly valued second homes in New York City, saying only property owners who receive a letter from city officials will be impacted by the levy.
Last week, the city’s Department of Finance posted an assessment roll online that “includes, but is not limited to, those properties that may be subject to the surcharge.” The document included the estimated market values of nearly 1 million residential properties , including hundreds of thousands that appeared to fall short of the threshold for the second-home levy.
The list quickly drew an enormous backlash from a range of New Yorkers, including homeowners who said the list included their longtime primary residences and City Council members who said they’d been caught off guard by its publication.
…
“The tax property roll that was posted last week is a reflection of all properties across New York City, not a reflection of those, specifically, that the pied-à-terre tax will be levied upon,” Mamdani said Wednesday.
…
The initial list published on Friday was far larger than the 10,000 to 13,000 properties that city and state officials estimated would qualify for the new tax. The more than 959,000 properties that were included represent more than 86% of New York’s roughly 1.1 million owner-occupied units.
Among the thousands of owners whose properties made the list were high-profile nonresidents including Ken Griffin and Joe Tsai, as well as famous New York denizens including Anna Wintour, Woody Allen, Martin Scorsese and Spike Lee. It also included the homes of New York City Council members, who must have their primary residence in the city to hold their offices.
“I’m still confused,” said Councilwoman Gale Brewer, who represents the Upper West Side and who said the home she had lived in since 1994 was on the list. Constituents worried they’ll be required to pay the tax despite living in the city have been calling up Brewer, she said.
“It’s really upsetting people,” she said. “I don’t think this is the way to go about it.”
Bloomberg Law: NYC Extends Pied-à-Terre Tax Exemption Deadline After Backlash
New York City is giving property owners an extra month to apply for an exemption from the new pied-à-terre tax following criticism from elected officials and tax attorneys over the program’s implementation.
Mayor Zohran Mamdani and Finance Commissioner Richard Lee said Saturday that homeowners now have a Sept. 18 deadline to submit an application. They originally were given until Aug. 30 to petition for removal from the tax list.
The extension comes after the city faced backlash from elected officials and tax attorneys for releasing a broad list of properties that could be subject to the levy, arguing it caused confusion among residents who were included but obviously didn’t belong.
Previous TaxProf Blog Coverage:
