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New York Enacts Second-Home Tax to Address Municipal Budget Shortfall

New York State lawmakers approved a tax on nonprimary residences valued at $1 million or more. The pied-a-terre tax is expected to generate $500 million in revenue and will roll out in two phases. Tax years 2026-2027 and 2027-2028 will see the initial phase apply to condos and co-ops as determined by the city's Department of Finance. Properties valued between $1 million and $3 million face a 4% annual levy, while those from $3 million to $5 million face 5.25%. Tax experts warn the levy could more than double property taxes for wealthy apartment owners. However, the city's outdated valuation system significantly undervalues properties—often at 10% or less of market value—limiting actual tax burdens. Starting in tax year 2028-2029, assessments will shift to comparable sales methodology.