[cjs_ac]

> New York City’s new tax on second homes will more than double property taxes owed by many wealthy luxury apartment owners, according to tax experts.

> State lawmakers on Wednesday passed the tax on nonprimary residences in order to help close the city’s budget gap. The so-called pied-a-terre tax will be imposed on second homes valued at $1 million or more. It’s expected to raise $500 million in revenue.

> Details on the tax obtained by CNBC show that the property tax would take effect in two different phases. In the first two years – the tax years 2026-2027 and 2027-2028 – condos and co-ops valued at more than $1 million by the city’s Department of Finance will be subject to the tax. Properties worth between $1 million and $3 million will face a 4% annual tax; properties valued at $3 million to $5 million will face a 5.25% tax; and those above $5 million will face a 6.5% tax.

The rates sound a bit steep (although I'm not familiar with the baseline tax rates on properties of that value) but the principle is sound. In the UK, the equivalent tax on housing is council tax, and local councils in Great Britain (but not Northern Ireland) are empowered to double the rates of council tax on second homes.

[usefulcat]

Well, you need to read the rest too:

"While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said."

It also mentions they plan to adjust property valuations in coming years, and when the valuations go up the rates will go down:

"After the valuation adjustments ... properties over $25 million will be taxed at 1.3%"

I dunno, 1.3% of the actual value seems.. not at all unreasonable? I live in TX and that's about what my property taxes are, for a property valued at several orders of magnitude less than any of Ken Griffin's NYC properties.

EDIT: As mil22 pointed out, this 1.3% tax is on top of the existing ~1.8% NYC property tax rate, so it's more like ~3.1% total.

[mil22]

> I dunno, 1.3% seems.. not at all unreasonable? I live in TX and that's about what my property taxes are, for a property valued at several orders of magnitude less than any of Ken Griffin's NYC properties.

Bear in mind, it's 1.3% on top of the existing ~1.8% average NYC property tax rate, so it may still be comparatively expensive relative to TX property taxes.

[usefulcat]

Good point, I missed that.

[HDThoreaun]

Taxes has no income tax. NYC plus ny state has income tax at close to 10%.

[kibwen]

This policy appears to target ultra-wealthy investors who are just parking their assets in NYC real estate and don't reside in NY to begin with, and thus aren't paying NY state income tax.

[nobody9999]

>Taxes has no income tax. NYC plus ny state has income tax at close to 10%.

That's as may be, and for residents of NYC that's impactful.

The new law targets second homes, which are generally defined as a residence which is not your primary residence. Meaning that the folks affected are generally not NYC (and often not NY state) residents, so the NYC/NY State income tax is irrelevant, as the folks affected don't pay those income taxes.

[closetohome]

Just to clarify, income over $5,000,000/year is taxed at 10.3%. Under a million is 4-6%.

[mil22]

> In the UK, the equivalent tax on housing is council tax, and local councils in Great Britain (but not Northern Ireland) are empowered to double the rates of council tax on second homes.

Very interesting to know. Many readers may not be aware that council tax in the UK is quite regressive and tops out at ~£4-5K / year on properties valued higher than ~£1M. So you can own a £5M GBP house and still pay only £5K / year for an annual effective property tax rate of just 0.1%.

This is one of the reasons buying a luxury house in the UK is comparatively quite cheap in terms of total cost of ownership compared to many states in the US where you have to pay much higher property tax rates, insurance, and so on.

So even if the council tax is doubled on a second home, you still might be paying only 0.2%. Compare that to an average property tax rate of ~1.8% in NYC (before pied-a-terre).

[woodpanel]

Yeah thanks for nothing for comparing a single kind of tax to your country, whilst your country/states don't have the excessive overall tax regimes as are present in Europe.

Nothing, absolutely nothing do we have to adjust to America, neither up or downwards.

That being said, and as much as I think Mamdani is an Ideologue, taxing second, unoccupied homes sounds absolutely reasonable (at least if they aren't rented out). Expect all kinds of shenanigans to circumvent this, but still.

[giobox]

> In the UK, the equivalent tax on housing is council tax

Council tax is difficult to compare to a percentage based property tax - the band based system means people in super valuable homes pay virtually nothing, at least relative to the value of the property, and each of the ~8 bands pays a fixed fee - once in the max band the tax stays the same no matter how valuable the home.

This is especially acute in places like Scotland, where the top band kicks in at anything over 212,000 and hasn't been adjusted since 1991... Essentially any new build starter home in many places will automatically be in the top band and taxed the same as some dude who bought a castle for millions.

Personally I've never thought of council tax as a property tax, even if the bands superficially are linked to it- the link to underlying property values is so broken now.

My first rented flat outta college was taxed at the highest band, and I sure wasn't rich then. It's widely argued to be a very regressive form of taxation - its opponents indeed argue it should be replaced with an actual property tax.

[strongpigeon]

> The rates sound a bit steep.

Agreed, but you also have to keep in mind that those people don't pay NYC income tax.

[altruios]

Second homes (and beyond) should be taxed out of existence while people are still trying to find their first. This tax is not steep enough, but it's a start.

[gowld]

Taxing a pied-a-terre $40K/yr or more per year provides more resources for developing housing than simply evicting the owner and reclaiming the space. There aren't enough pied-a-terres to house the people who need housing. We need expensive premium housing to fund affordable housing at scale.

[altruios]

The cost of a "pied-à-terre" ranges from $500k to over $1.5m.

A new house costs at MINIMUM $400k to build (in New York state, not to mention the city).

There are around 100k pied-à-terre in New York CITY alone.

There are about 350k homeless people in New York city.

Taxing all of those secondary 'homes' at 40k would and spending those taxes ONLY on new housing construction would yield at MOST 100k houses (per year).

So I was incorrect in what was more efficient IF taxes only go to building new houses... which I AFAIK is not accurate to how those taxes would be distributed. (it may still be better if enough revenue is going to housing dev).

So a ~10% tax rate for SECOND+ homes is still too small considering how many houses we need to build. I argue for 100% tax: pay that price every year if you want a SECOND+, that would completely offset a new house in compensation for tying one up).

If you are rich enough to afford a vacation home: you pay vacation prices. You don't get to use it as an "investment vehicle" we need to dissuade that mentality completely.

[jmull]

You missed a key detail: the NYC valuation system undervalues properties to the tune of around 10% of their actual market value. So your 6.5% tax is effectively aroubd a 0.65% tax against actual market value. That’s not bad (it’s a lot better than what I pay for my regular middle class home. Not in NYC, but I pay a bit shy of 2% annually)