New York passes pied-a-terre tax

toomuchtodo

“It always seems impossible until it's done."

Neywiny

Probably the least complicated tax law. Increase taxes to increase revenue. Makes sense. Align valuations with reality while maintaining relatively constant absolute tax dollar amounts. Also makes sense. It's really not that hard.

nemomarx

On unoccupied or secondary residences specifically, not on wealth overall. This is more of a housing policy?

jmclnx

$ have to come from somewhere, with the Fed cutting taxes for the rich and benefits for the poor every other term, time for the states to take over.

onlyrealcuzzo

I think this is in the right direction, but the cut off at $1M is interesting. Why's there an obsession with the $1m cutoff? The dollar has been turned to dust. $1M is not that much money, especially in housing, especially in NYC. Why tax $1m second homes and not second homes generally? Effectively, you're going to tax almost all second homes. So why the arbitrary cutoff? Chicago wanted to add a "millionaire's tax" on $1m+ home sales. At least in Chicago, that isn't effectively taxing the vast majority of housing (and total value) - so there's some distinction worth having.

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.

everdrive

I'm really curious about this. Wont, as a rule, any super-rich 2nd, 3rd, and 4th homes in New York be completely unaffordable for almost everyone? It feels a bit like you're potentially spreading around the super-luxury homes across a wider breadth of the super-rich, but not much else. Is there a better way to think about this?

burlesona

Property tax is the workable wealth tax. There's no such thing as a perfect policy, but in the context of NYC this seems worth trying. I'll be interested to see if it helps create some liquidity in the housing market (the goal), or if it only functions as revenue source. One wrinkle I haven't heard much discussion of -- cities respond to incentives too. NYC is a global destination for the mega wealthy. If it turns out the uber-rich don't mind paying and this becomes a cash cow for the city, that creates incentives for the city to cater to them and try and get more uber-rich people to have second homes in the city.

picafrost

As I understand it many of the very wealthy do not "own" properties directly but control LLCs that do. The chain of trust/LLC ownership can be complex. Also as I understand it, this legislation does not really answer that call effectively -- though I have, of course, not read the full legal text myself. I suppose in Ken Griffin's case, even if his residence is owned by an LLC he controls, he is known to reside in it. But how effective is this legislation when the purpose of LLC ownership is expressly anonymity and accounting convenience?

gowld

Flagged misleading editorialized title. Actual title is "New York passes Mamdani’s pied-a-terre tax"

GenerWork

This is fantastic news for the Miami real estate market. Does anybody has stats as to how many homes this would actually affect?

wetpaws

Surpriosingly sane idea suddenly

hibikir

If this has a problem, it's the difficulty of application: 2nd homes, and only if you have X amount of money, instead of just a flat increase. Property taxes (or really, in NYC land taxes, as most of the property tax is really the value of the land) are just very efficient, and make much less of a difference on the price of rents than you'd think. Unfortunately, doing that is very unpopular. Unpopular enough that we see states trying to get rid of property taxes, and those providing limits to increases, which basically guarantee misallocation and rising prices. But what is economically reasonable and what the voters like have very little to do with each other.

alexk307

This seems like a no-brainer. Tax 10-15k ultra wealthy people who park their cash in second homes in exchange for ~$500M/year in revenue.

Aurornis

Actual title from the article: > New York passes Mamdani’s pied-a-terre tax. Here’s who pays and how much (The submitted title at time of commenting is "New York Passes Tax on the Ultra-Wealthy) It's a tax on second homes. If you thought it was a wealth tax from the editorialized title, like I did, that's not correct.

freediddy

What's to stop them from selling to a holding company so that it's not literally his own second house?

josefritzishere

The wealthy are very easy to tax. They possess a lot of assets. Really, all of them should be taxed progressively, like shooting fish in a barrel.

11101010010001

>“All my clients already feel like they pay too much,” Pollack said. “These numbers are significant. I don’t care how wealthy you are.” If that argument holds up in court, we are all screwed.

VikingCoder

> 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. I heard about a system for this that struck me as brilliant. Make someone declare the value of their property. Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost. TADA. And if someone wants to artificially inflate the value of their home, to reflect the difficulty of moving out, finding a new secondary residence, etc, then that's their business. No worries. We'll tax that additional value, no problem. I think this system goes back thousands of years. Why not use it?

thrownaway561

If you want to tax the ultra-wealthy, prevent Securities-Based Loan (SBL) or a Securities-Based Line of Credit (SBLOC). Honestly this is how EVERY SINGLE wealthy person gets around paying taxes. Stocks should be bought and sold, period the end. That is how the market is supported to work. If you closed this simple loophole, you would see a massive amount of tax revenue.