The Mamdani administration has released proposed rules outlining how New York City’s new pied-à-terre tax will be carried out, with the first surcharge notices expected to be sent within weeks, The Post has learned.
Under the guidelines, the city Department of Finance is expected to notify owners of thousands of high-end secondary homes by August 30 if their properties have been identified as potentially subject to the new tax.
The agency will have broad authority to determine whether a residence qualifies for the surcharge, including subpoena power and the ability to review records through audits reaching back as far as six years.
The tax, approved by the state Legislature, applies to unoccupied properties that are not used as primary residences, including one- to three-family homes valued at $5 million or more, as well as co-ops and condominiums worth at least $1 million.
Finance officials may use those investigative powers to decide whether a property should be taxed or whether it qualifies for an exemption under the new rules.
The proposed regulations also give the city the ability to impose penalties on owners who submit false, inaccurate or misleading information, with fines equal to 50% of the pied-à-terre tax bill. The measure is aimed at discouraging what officials describe as “gamesmanship” by property owners trying to avoid the levy.
As one example, the city pointed to a scenario in which “a condominium property 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.
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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.
