Comptroller warns second home tax could raise less than expected
The report says that before adjusting factors, the tax could raise almost exactly $500 million from a little over 11,200 properties. However, it estimates the tax would likely be between $340 million and $380 million once real‑world factors are considered.
New York City’s executive budget is now officially late as Mayor Zohran Mamdani works to close a multibillion‑dollar deficit without cutting core services.
The Council agreed to extend the budget deadline to May 12, giving negotiators more time to address a gap that exceeds $5 billion.
Among the proposals under consideration is a pied‑à‑terre tax, a surcharge on second homes valued at $5 million or more.
Supporters, including the mayor and Gov. Kathy Hochul, have said the measure could generate roughly $500 million annually and affect about 13,000 properties, many of them high‑rise apartments that sit vacant for much of the year.
A new analysis from City Comptroller Mark Levine suggests the revenue would likely fall short of those expectations.
The report says that before adjusting factors, the tax could raise almost exactly $500 million from a little over 11,200 properties. However, it estimates the tax would likely be between $340 million and $380 million once real‑world factors are considered, including how many units are rented and how property owners might change their behavior to avoid the surcharge.
“There are examples of other states and localities where similar taxes have been proposed and enacted, and it hasn’t lived up to revenue expectations,” said Matt Cammarata, a New York City tax attorney.
Cammarata said one of the biggest legal challenges could center on how the city determines the value of the homes subject to the tax.
“If they’re using property‑tax assessed value, I think the question will be, 'Is that accurate?'” he said. “And do taxpayers who are potentially subject to the tax have the opportunity to present opposing valuations that would potentially reduce the tax? I think that’s an area where there could be a lot of controversy, depending on how value is defined in the law.”
The comptroller’s report is based on earlier versions of the legislation. Lawmakers have not yet released final language detailing how the tax would be structured.
