Reactionary taxes like this have a tendency to be ill-considered and have unintended side effects.
NY also has a 1% penalty on paying more than $1 million for housing, which was probably enacted to proletariat applause when $1 million was still considered a lot of money. Now it distorts the value of entry level housing in NYC, where you'll have a hard time finding anything more than a studio apartment for $1 million. High closing costs and similar distortions mean people tend to lose money on housing in NYC unless it's held for many years.
$5 million is expensive enough that this probably won't add much housing stock in the short term. Still, politicians never seem to think through the consequences of headline-grabbing tax policies.
"We find that, before adjusting for these factors, our choice of tax rates and brackets could raise almost exactly $500 million from a little over 11,200 properties. However, revenues could be reduced to between roughly $340 million and $380 million based on assumptions on exclusions for rented units and behavioral changes following the imposition of the tax."
It's all media feel goodsies but not actually do anything substantive.
> an initiative to appease Mayor Zohran Mamdani and liberal voters
Taxing the rich is not a Liberal thing, but the Rich is calling it that because they do not want to pay any taxes at all.
He was elected because people are starting to feel real pain and seeing the ultra rich paying far less taxes then they are. If it was up to me, I would tax all the second homes above 5 million USD and add a Luxury Tax on all valuable Autos too.
I strongly doubt that this is going to have the effect that they want it to.
It won't raise the taxes that they expect it to. It won't free up inventory. It will halt construction.
NY should tax anyone with any money until everyone leaves. Then abolish money, like in Star Trek, and live the utopia. I don't think this will happen during my lifetime, but I am not missing it either.
I assume this will be challenged in court immediately. Does anyone understand whether it is likely to survive those legal challenges?
EDIT:
Here is a list reported by Google search but I really do not understand or know how reasonable these challenges are.
Equal Protection: Owners may argue the tax unfairly treats similar properties differently based on second-home status, value threshold, or owner residence. This is likely a weaker challenge because tax classifications usually receive deferential rational-basis review.
Nonresident Discrimination: A challenge could claim the tax targets out-of-city, out-of-state, or foreign owners rather than property use. The law is safer if written as a tax on non-primary luxury residences, not on nonresidents as a class.
Assessment Inequality: Owners may challenge how the city values condos, co-ops, townhouses, and mixed-use properties. This could be significant if the $5 million threshold is applied inconsistently or without reliable valuation rules.
Due Process: Owners may argue the law lacks clear notice, proof, exemption, and appeal procedures. This would be especially relevant for disputes over whether a home is truly a second home.
Residency Conflicts: Taxpayers may challenge inconsistent treatment if the city treats them as NYC residents for income tax but non-primary homeowners for this tax. Clear coordination between residency rules would reduce this risk.
Home Rule Authority: Opponents may argue NYC lacks authority unless the state clearly authorizes the tax. This challenge is less likely to succeed if Albany passes valid enabling legislation and NYC follows required procedures.
Good! Second homes in any region with low inventory should be taxed...
Zohran is doing too much. I hope he at least leaves the second yachts alone.
Reactionary taxes like this have a tendency to be ill-considered and have unintended side effects.
NY also has a 1% penalty on paying more than $1 million for housing, which was probably enacted to proletariat applause when $1 million was still considered a lot of money. Now it distorts the value of entry level housing in NYC, where you'll have a hard time finding anything more than a studio apartment for $1 million. High closing costs and similar distortions mean people tend to lose money on housing in NYC unless it's held for many years.
$5 million is expensive enough that this probably won't add much housing stock in the short term. Still, politicians never seem to think through the consequences of headline-grabbing tax policies.
One way to avoid the tax is to rent out the residence: https://comptroller.nyc.gov/reports/the-pied-a-terre-tax-and...
It's interesting that people choose to leave their properties vacant - They're effectively "taxing" themselves by foregoing rent (4+%/yr cap rate).
Is vacant real estate even a good investment?
If I was a rich dude in nyc I would set up a shell company, transfer ownership to that, and then rent it back from the shell.
I dunno why anyone thinks this matters. https://comptroller.nyc.gov/reports/the-pied-a-terre-tax-and...
"We find that, before adjusting for these factors, our choice of tax rates and brackets could raise almost exactly $500 million from a little over 11,200 properties. However, revenues could be reduced to between roughly $340 million and $380 million based on assumptions on exclusions for rented units and behavioral changes following the imposition of the tax."
It's all media feel goodsies but not actually do anything substantive.
> an initiative to appease Mayor Zohran Mamdani and liberal voters
Taxing the rich is not a Liberal thing, but the Rich is calling it that because they do not want to pay any taxes at all.
He was elected because people are starting to feel real pain and seeing the ultra rich paying far less taxes then they are. If it was up to me, I would tax all the second homes above 5 million USD and add a Luxury Tax on all valuable Autos too.
I strongly doubt that this is going to have the effect that they want it to. It won't raise the taxes that they expect it to. It won't free up inventory. It will halt construction.
NY should tax anyone with any money until everyone leaves. Then abolish money, like in Star Trek, and live the utopia. I don't think this will happen during my lifetime, but I am not missing it either.
Tax them to oblivion, the goal should be for them to sell! Let them go to Dubai if they don't like it.
California next please! If you aren’t in your home 9 months of the year you can stay in a hotel. Thanks!
Edit: lol -4 nice! What are y’all upset about?
I assume this will be challenged in court immediately. Does anyone understand whether it is likely to survive those legal challenges?
EDIT: Here is a list reported by Google search but I really do not understand or know how reasonable these challenges are.
Equal Protection: Owners may argue the tax unfairly treats similar properties differently based on second-home status, value threshold, or owner residence. This is likely a weaker challenge because tax classifications usually receive deferential rational-basis review.
Nonresident Discrimination: A challenge could claim the tax targets out-of-city, out-of-state, or foreign owners rather than property use. The law is safer if written as a tax on non-primary luxury residences, not on nonresidents as a class.
Assessment Inequality: Owners may challenge how the city values condos, co-ops, townhouses, and mixed-use properties. This could be significant if the $5 million threshold is applied inconsistently or without reliable valuation rules.
Due Process: Owners may argue the law lacks clear notice, proof, exemption, and appeal procedures. This would be especially relevant for disputes over whether a home is truly a second home.
Residency Conflicts: Taxpayers may challenge inconsistent treatment if the city treats them as NYC residents for income tax but non-primary homeowners for this tax. Clear coordination between residency rules would reduce this risk.
Home Rule Authority: Opponents may argue NYC lacks authority unless the state clearly authorizes the tax. This challenge is less likely to succeed if Albany passes valid enabling legislation and NYC follows required procedures.