The Mamdani administration has unveiled rules for how the city’s new pied-à-terre tax will be enforced — with the first surcharge notices going out in the coming weeks, The Post has learned.
The city Department of Finance will let owners of thousands of luxury secondary residences know they’ve been deemed eligible for the tax by August 30, according to the newly published proposed guidelines.
The DOF has subpoena power and can conduct audits going back six years to determine whether a property should be taxed or exempt.
One-to-3 family homes worth at least $5 million and co-ops and condominiums valued at $1 million or more — that are unoccupied, non-primary residences — would be subject to the surcharge, approved by the state Legislature.
The DOF has subpoena power and can conduct audits going back six years to determine whether a property should be taxed or exempt.
And it can impose a fine equal to 50% of the pied-à-terre tax bill for providing false, inaccurate or misleading information — in a bid to crack down on “gamesmanship” by owners seeking to avoid the levy, according to the rules.
The city particularly highlighted as an example, “a condominium property [that] has been divided into more than three units to avoid application of the surcharge and such division was made in bad faith.”
“This provision would promote compliance with the surcharge by increasing the potential cost of evasion by property owners while ensuring that such property owners are afforded an opportunity to challenge the imposition of such penalties,” the regulation states.
Owners will have 30 days to appeal or challenge the new tax bill imposed on non-primary residences. Appeals would be made to the city’s Tax Commission, or in some cases to the DOF.
The surcharge — part of Mayor Zohran Mamdani and his Democratic Socialists of America comrades’ “tax the rich” crusade — aims to target wealthy people who don’t live in New York City, but own residential property here that sits unoccupied.
City officials estimate the pied-à-terre tax will generate between $340 million and $500 million in annual revenue from approximately 10,000 luxury second homes.
One-to-three family homes will be taxed at a rate of between 0.8% to 1.3% depending on their value, while the rate for co-ops and condos starts at 4% and goes up to 6.5% for those worth over $5 million.
Co-ops and condos are believed to be undervalued, based on the city’s property value assessment system, so the higher rate of tax will allow the city to collect more revenue from them, real estate insiders said.
The DOF is expected to recalculate their value in two years, as part of “phase two” of the tax, which will lapse in 2031 unless the Legislature renews it.
The real estate industry has long opposed the pied-à-terre tax, citing complexity in determining who is covered and collecting it — and insiders said there are sure to be lawsuits contesting the mandate.
Real estate sources note the new tax would be a headache for co-op boards responsible for helping collect the surcharge from a shareholder or owner of an apartment in the building.
“The Department of Finance’s proposed rules highlight the serious challenges of implementing the second-home tax fairly,” said Zachary Steinberg, executive vice president of external relations & advocacy at the Real Estate Board of New York.
“As the City rushes to roll out this new tax, many New Yorkers—particularly cooperative apartment owners who were never intended to be affected—may be hit with unexpected tax bills and little time to appeal,” the REBNY rep added.
The rules go into effect after the public comment period closes July 9.
Most comments thus far favor the pied-a-terre tax, but there are naysayers.
“Communism at its finest. This law will ensure that anyone with a second home here will be driven out of NYC if they have not already left. You are chasing your tax bases away,” one anonymous response said.
But Mohamed Fathelbab, a licensed real estate agent said, “I’m telling you all, this tax will not chase a single multimillionaire or billionaire away from the city. And the revenue that’ll come in will be of great benefit.”
Billionaire hedge fund honcho Ken Griffin’s city property tax bill is reportedly estimated to go up about $1.3 to $1.4 million under the new tax, approved by Gov. Kathy Hochul and Albany lawmakers at the behest of Mamdani to help fill city coffers.
The democratic socialist Mamdani caused a stir when he singled out the Citadel founder’s penthouse as eligible for the tax in a viral video filmed outside the residence.
