NYC Pied-à-Terre Tax Passes: Second Homes Over $1M Hit

New York state lawmakers have passed a pied-à-terre tax targeting non-primary residences in New York City, with the surcharge kicking in on properties valued at $1 million or more. The tax is aimed at closing the city’s budget gap and is expected to raise roughly $500 million in revenue.

The measure was tucked into the new state budget and will reshape carrying costs for a chunk of Manhattan’s luxury condo and co-op market.

How the tax works

The property tax takes effect in two phases. In the first two years, tax years 2026-2027 and 2027-2028, condos and co-ops valued above $1 million by the city’s Department of Finance are subject to the tax. Properties worth between $1 million and $3 million face a 4% annual tax, $3 million to $5 million face 5.25%, and those above $5 million face 6.5%.

Those headline rates look steep, but experts note the city’s antiquated assessment system dramatically undervalues properties, which softens the actual bill.

Starting in 2028, the city will reassess properties using comparable sales. After that adjustment, properties between $5M and $15M get taxed at 0.8%, $15M to $25M at 1.05%, and properties above $25M at 1.3%.

Who pays, and how much

The tax only applies to homes that are not the owner’s primary residence and are not rented to a primary resident or occupied by the owner’s family. That carves out actual New Yorkers and aims directly at out-of-state owners parking capital in Manhattan real estate.

Citadel CEO Ken Griffin became the face of the tax after Mayor Zohran Mamdani posted a video in front of Griffin’s penthouse announcing the measure. Griffin fired back, threatening to pull back business and jobs from New York. Griffin, a Florida tax resident, would see his Manhattan property tax bill more than triple under the new tax. He purchased the 24,000-square-foot penthouse at 220 Central Park South in 2019 for $238 million.

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Part of a broader trend

New York isn’t alone. Rhode Island enacted a comparable measure in 2025, dubbed the “Taylor Swift Tax,” imposing a surcharge on non-owner-occupied homes valued above $1 million, effective July 2026. Montana also enacted legislation in 2025 imposing a higher flat property tax rate on second homes and vacation properties beginning in 2026, though using a differential rate structure rather than a high-value surcharge.

The pattern hints at a national trend of states using property tax policy to address housing affordability and absentee ownership.

Market implications

Higher carrying costs may push some owners to sell to avoid the tax, which would trigger one-time revenue, since combined NYS and NYC real estate transfer taxes approach 6% on residential properties valued at $25 million or more.

Watch for pressure on ultra-luxury Manhattan inventory, REITs exposed to NYC residential, and luxury brokerages whose volume rides on the high end. For more policy and market coverage, see other market news.

Options market and stocks to watch

Watch for reactions across names tied to NYC luxury real estate and high-net-worth client flows:

• DOUGS (Douglas Elliman): Watch for impact on luxury brokerage volumes if listings surge or buyers step back.
• CIGI (Colliers): Watch for sentiment on high-end residential transaction activity in NYC.
• EQR (Equity Residential): Watch for spillover into rental demand if pied-à-terre owners convert units to long-term rentals.
• AVB (AvalonBay): Watch for any read-through to NYC-area multifamily fundamentals.
• Z (Zillow): Watch for traffic and listing data trends in NYC luxury segments.

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