Gov. Kathy Hochul plans to propose a tax on New York City second homes worth $5 million or more to address a budget deficit.
New York Gov. Kathy Hochul is planning to propose a tax on New York City's second homes worth $5 million or more in an effort to fill the city's yawning budget deficit.
The tax, which is expected to be formally proposed as part of the governor's annual budget this spring, would apply to these vacation homes and part-time residences. It would specifically target wealthy individuals who own these pieds-à-terre but primarily live outside the city.
"New York City is the greatest city in the world, and the people who call it home should not be left carrying the burden alone," Hochul said in a statement. "If you can afford a $5 million second home that sits empty most of the year, you can afford to contribute like every other New Yorker."
The details of the proposal are still being ironed out, but the governor's office expects the tax would raise $500 million a year. The New York Times previously reported Hochul's planned proposal.
New York City faces a gaping hole in its budget projected at as much as $12 billion over the next two years. Mayor Zohran Mamdani had proposed a tax on wealthy New Yorkers and corporations to help fill the gap.
That proposal gained little momentum with Hochul, a Democrat who is up for re-election this year. Mamdani later floated a 9.5% property tax increase as a last-resort measure, though that has sparked outrage among homeowners and other property owners.
Hochul is more on board with a pied-à-terre tax, which Mamdani also supports.
"Thanks to the support of Governor Hochul, we are one step closer to balancing our budget by taxing the ultra-wealthy and global elites with a pied-à-terre tax -- the first of its kind in our state," the mayor said in a statement.
There are an estimated 102,900 of these units in New York City that aren't for rent or sale but sit vacant because they are used for "seasonal, recreational, or occasional use," according to the city's 2021 Housing and Vacancy Survey.
New York City's real-estate community is already scrambling. Industry leaders say that this tax would discourage new investment at a time when the city desperately needs more resources.
"This annual tax will weaken the city's broader economy," said Jim Whelan, president of the Real Estate Board of New York, an industry trade group. "It will not raise the amount of revenue expected, but will eliminate thousands of construction jobs, lower property values, and raise costs for New Yorkers."