Chris Dolmetsch (Bloomberg Law): Mamdani Handling of Pied-à-Terre Tax Contested by Homeowners
New York City was sued by a group of homeowners seeking to delay the rollout of Mayor Zohran Mamdani’s new pied-à-terre tax, saying the publication of a list of properties that could be subject to the levy has caused “mass confusion” and invited “unwarranted scrutiny” of their personal information.
The suit, which was filed on Friday in New York state court in Staten Island on behalf of three homeowners, doesn’t challenge the tax itself. Instead, it takes aim at the assessment roll and the notices that informed property owners that they may be subject to the levy.
Rebecca Picciotto (Wall Street Journal): NYC’s Pied-à-Terre Owners Hunt for Creative Ways to Dodge New Tax
Actual part-time city dwellers are looking for ways to reduce or get out of the new tax. They are pursuing a number of exemptions, such as proving that an immediate family member lives in the home, or that it is rented out long term.
The mad dash for tax exemptions has flipped the typical norms of real estate upside down. Hoping to fall below the $5 million tax threshold, owners are now asking appraisers to prove that their property values are lower than they seem.
Rather than hide their property’s flaws, they are spotlighting the wear-and-tear on their apartments, their lack of renovation or the fact that there is no doorman in the lobby.
Mayor Zohran Mamdani’s tax on luxury pieds-à-terre has set off a superstorm among the city’s wealthiest homeowners. The new levy will apply to homes worth $5 million or more and to co-ops and condos worth $1 million or more where the owner isn’t a primary resident of the city. The rollout has been messy, with some New Yorkers saying they have been mistakenly targeted.
The owners well above the $5-million mark are pursuing other strategies, including a desperate hunt for renters.
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Some are considering moving their children who attend New York University or other local colleges out of their dorm rooms and into their pieds-à-terre.
Or they are considering establishing permanent residence in the city because for them, the tax on their second homes outweighs the cost of New York’s state and city income taxes.
A $12 million, single-family pied-à-terre, for instance, would be subject to an additional $75,000 tax bill, according to the city comptroller’s office analysis based on earlier versions of the legislation. The latest version of the law would generally impose a $96,000 pied-à-terre tax on the home.
One married couple that Armanino’s Goodman advises is considering establishing separate households to dodge the tax. One spouse would establish their New York City pied-à-terre as a primary residence, while the other, who is their main source of income, would stay put in their Connecticut home.
This setup would allow them to avoid the pied-à-terre tax without their primary breadwinner incurring New York City’s notoriously high income tax, Goodman said.
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