Tax On NYC's Luxe Second Homes Gains Steam

NEW YORK — New York City's elite could soon have to pay even more for luxurious second homes like that $238 million Midtown condo. Gov. Andrew Cuomo and the state's legislative leaders support imposing a so-called pied-à-terre tax on the city's wealthy absentee homeowners.

Proposals in the state Senate and Assembly would establish a property surcharge on New York City homes worth more than $5 million that are not the owner's primary residence. Both chambers included a pied-à-terre tax in their one-house budget plans unveiled Tuesday.

The tax could be lucrative. City Comptroller Scott Stringer estimates it would bring in up to $650 million a year, and the Cuomo administration says it could raise as much as $9 billion toward the beleaguered MTA's capital budget.

"I think if they have money to buy a 5 million-dollar apartment which is not their prime residence, and it's their little Manhattan getaway, they can afford the tax," Cuomo said in a Tuesday radio interview.

State Sen. Brad Hoylman, a Manhattan Democrat, has pushed legislation to establish the tax since 2014. City Council lawmakers have also gotten behind the idea, arguing wealthy out-of-towners who don't contribute local income tax should pay their fair share.

The Assembly's budget plan would use a sliding surcharge rate for the pricey properties from 0.3 percent to 4 percent, depending on the home's value. That's similar to Hoylman's latest bill, which also uses a sliding scale with a maximum $370,000 fee and a 4 percent surcharge for homes worth more than $25 million.

The latest push for a pied-à-terre tax follows hedge fund billionaire Ken Griffin's record-breaking purchase of the $238 million home on Central Park South. Griffin is based in Chicago and reportedly plans to use the penthouse when he's in New York for business.

"(Y)ou have people coming in buying $200 million apartments and there’s no mortgage-recording tax because they’re pretty much paying cash, and we still have to provide services. So we’re asking people to contribute a little more," Assembly Speaker Carl Heastie (D-Bronx) said recently, according to Bloomberg.

Mayor Bill de Blasio has also warmed up to the tax as an additional funding source for the MTA. He has long pushed for a millionaires tax to shore up public transit, but joined Cuomo last month in supporting congestion pricing along with taxes on marijuana and internet sales.

"Now if the governor is saying he thinks there’s a way to additionally get pied-à-terre tax, I’m all ears," de Blasio said last week, according to a transcript. "I think that could be a very helpful addition."

But the influential Real Estate Board of New York has concerns about the proposal. Its president, John Banks, says it would slow down new condo construction and cause transactions to drop, hurting employment and tax revenue.

"Before enacting a new tax that would do more harm than good, everyone should take a step back and consider that this additional tax would suppress economic activity and lead to lower tax revenue for the city," Banks wrote in a column published Tuesday.