New York just put a new annual tax on the ultra-wealthy‘s part-time apartments, and the billionaire it is practically named after will barely feel it. The people who might actually get squeezed are the volunteer boards that run ordinary co-op buildings.
The pied-a-terre tax is a yearly surcharge on non-primary New York City residences worth $5 million or more, set to take effect July 1, 2026, and it is expected to hit about 10,000 properties. Governor Kathy Hochul pitched it as a fairness measure and projected it would raise at least $500 million a year for the city, and Mayor Zohran Mamdani championed it as a way to balance the budget by taxing the ultra-rich. The top rate runs to 6.5 percent of qualifying value.
The poster child is Citadel founder Ken Griffin, who lives full-time in Miami and owns three New York apartments, including a $238 million penthouse on Central Park South and two units in the 740 Park Avenue co-op. His bill under the new tax: an extra $1.3 million to $1.4 million a year. On a $238 million penthouse, that is a rounding error, and Griffin has already signaled he would rather invest in Florida. The tax built to make billionaires pay barely moves a billionaire.
Now the part that flips the whole thing. For co-ops, the city does not bill the individual shareholder. It adds the surcharge to the entire building, which makes the co-op board responsible for collecting it from the pied-a-terre owners inside. If the board falls behind, the city can place a lien on the whole building, not just the absentee owner’s unit. So a tax aimed at out-of-town billionaires turns into a collections job for unpaid volunteer boards, and the easiest way for a board to avoid the headache is to stop letting anyone use an apartment as a second home at all.
The real estate industry, predictably, hates it. Real Estate Board of New York president Jim Whelan warned the tax would not bring in the expected revenue and would cost construction jobs, lower property values and raise costs for New Yorkers. On the State Senate floor, Jack Martins argued it was wrong to tax people on property value they accrued over a lifetime rather than on their income, invoking his own immigrant family’s housing history. Defending it, State Senator Andrew Gounardes made the basic-fairness case: people who own multiple multimillion-dollar homes can afford to pay a little more so the city stays livable for everyone else.
Strip out the politics and the practical question is who actually pays and who actually administers it. The billionaires can absorb it or decamp to Miami. The boards of regular co-op buildings, the retirees and the long-time owners Martins talked about, are the ones left sorting out collection, liens and whether to ban second homes outright.
The tax takes effect July 1. If you own in a co-op or condo, the move now is to ask your board how it plans to collect the surcharge and whether the building is exposed to a lien if someone does not pay. The rules and rates are set by the state and administered through the city’s Department of Finance, and that is the office whose guidance will tell your building exactly what it owes.
Featured image: Itrytohelp32 / CC BY-SA 4.0, via Wikimedia Commons
