Number of Pied-à-Terre Tax Subjects Keeps Dwindling
The much-debated pied-à-terre tax in New York City is looking less and less like a powerful tool to bring in more revenue for the city.
The Department of Finance granted more than 6,800 exemptions to homeowners looking to be excluded from the tax, Crain’s reported, representing more than half of the 11,000-plus applications the city received. The deadline to apply for an exemption passed this week after multiple extensions.
The city initially notified more than 17,000 people that they could be subject to the second-home surcharge. Between exemptions and mistakes caught by the city through tax records, nearly 9,000 homeowners have since been spared from the charge.
It’s hard to imagine the city will come close to recouping anywhere near its initial estimates in terms of revenue.
State officials projected a $500 million annual revenue windfall based on 13,000 homes being taxed. City Comptroller Mark Levine found that to be a reachable number with even 11,200 taxpayers included. But the pool of homeowners is shrinking and will likely continue to decline as people contest their property valuation with the Tax Commission.
The second-home tax affects those who own one-, two- and three-family homes valued at $5 million and above, as well as those who own condo and co-op units with assessed values of $1 million and up. The amount of each surcharge depends on the home value; City Hall still thinks $500 million in revenue is on the table.
The controversial tax and its rollout have been the subject of litigation.
Last month, a Staten Island judge ordered the Zohran Mamdani administration last month to scrap its initial implementation of the pied-à-terre tax and start from the beginning. The city’s lawyers quickly appealed the ruling and got the appellate court to impose a stay, allowing the rollout to move forward.
The state is also looking at two separate suits challenging the surcharge on constitutional grounds. One case involves developer Steve Wynn and former Secretary of Commerce Wilbur Ross as plaintiffs, who are seeking a change of venue from Suffolk County to New York County.
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