New York City Mayor Zohran Mamdani asserted Wednesday that the city will still collect $500 million annually from the new pied-à-terre tax, despite a reduction in the number of properties initially targeted for the levy. Department of Finance officials are now issuing notices to 10,800 property owners who must prove New York City is their primary residence, a decrease from the 17,000 notices sent out when the tax on luxury second homes was introduced late last month.
The rollout has been met with confusion and a lawsuit, leading city officials to reveal the reduced property count and extend the deadline for exemption filings. This uncertainty has raised questions about the revenue projections. Jared Walczak, a senior fellow with the Tax Foundation, noted that when the tax base is reduced significantly, revenue estimates may be too high, based on incomplete assumptions.
Walczak suggested that recalculating the estimate with updated information on qualifying homes is a straightforward process. The pied-à-terre surcharge was part of a series of tax measures Mamdani advocated for, aimed at increasing revenue for New York City's finances. Governor Kathy Hochul, while largely resisting broader "tax the rich" proposals, supported the pied-à-terre surcharge in collaboration with the state legislature.
The tax applies to one- to three-family homes valued at $5 million or more and co-ops and condos valued at $1 million or more that are not occupied as primary residences. When Governor Hochul first proposed the tax, her office estimated it would affect approximately 10,000 homes and generate $500 million annually. However, an analysis by City Comptroller Mark Levine in April suggested a lower revenue yield, estimating between $340 to $380 million from about 11,000 properties.
Mamdani explained that the initial 17,000 notices were sent before the city had access to 2025 income tax filings, which are typically released in February. He stated that the state has now provided early access to these filings, allowing for the issuance of revised notices based on updated tax information. Governor Hochul has distanced herself from the tax's implementation, deferring to Mamdani. She also indicated no interest in extending similar taxes to upstate municipalities, emphasizing that the pied-à-terre surcharge was specifically designed to address New York City's financial challenges.