ALBANY, N.Y. (NEXSTAR) — State leaders are debating a “pied-à-terre” tax in New York City as they negotiate the late state budget. On Thursday, Democratic State Senator Pat Fahy pushed to expand the tax outside the Five Boroughs to help upstate towns struggling with housing costs.
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The tax targets second homes worth more than $5 million. Owners who do not live in the homes full-time would pay an annual surcharge. Governor Kathy Hochul and New York City Mayor Zohran Mamdani both support the tax downstate, announcing it jointly as part of the state and city budget processes back on April 15.
They projected it would raise $500 million every year and affect 13,000 investor properties. But, also on Thursday, New York City Comptroller Mark Levine released a report estimating that actual revenue from taxing empty luxury homes would likelier be between $340 and $380 million, and that only about 11,200 properties would ultimately qualify.
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Levine acknowledged that those 11,200 homes could technically generate $500 million, but warned that rich owners would be likelier to change their accounting methods or find loopholes. To avoid the tax, they could sell the property, make it their primary residence, or start renting it out year-round.
While that might add housing supply, according to the comptroller, it would leave the city short of the funds it needs to balance its budget. Levine pointed to Vancouver, Canada, where a similar tax reduced vacant by 61.4% since 2017. Because so many dodged the tax by occupying or renting, Levine extrapolated that revenue for NYC would fall short by about 10% of the initial predictions.
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“If implemented haphazardly, this tax would result in less investment, less housing and less revenue for the city, state, and MTA,” agreed Real Estate Board of New York President James Whelan. He argued that the tax would hurt the city…