The 220 Central Park South building, center, is in New York, U.S., Wednesday, January 23, 2019. Just days after purchasing one of London’s most expensive residential properties, Citadel founder Ken Griffin set a U.S. record with the $238 million penthouse at 220 Central Park South.
Jeenah Moon | Bloomberg | Getty Images
New York City’s new second-home tax will more than double the property taxes owed by many wealthy luxury apartment owners, tax experts say.
State lawmakers passed a tax on non-primary residences Wednesday to help close the city’s budget deficit. The so-called pied-à-terre tax will be imposed on second homes valued at $1 million or more. It is expected to generate $500 million in revenue.
Details on the tax obtained by CNBC show that the property tax would take effect in two different phases. During the first two years, tax years 2026-2027 and 2027-2028, condos and cooperatives valued at more than $1 million by the City’s Department of Finance will be subject to the tax. Properties valued between $1 million and $3 million will be subject to a 4% annual tax; properties valued between $3 million and $5 million will be subject to a 5.25% tax; and those over $5 million will face a 6.5% tax.
Although the tax appears high, experts say the city’s outdated assessment system significantly undervalues properties, reducing the burden. City assessments can often be 10 percent or less of true market value, they said.
Rather than overhaul the system immediately, the city will gradually update assessments – and the tax – based on budget documents. Beginning in fiscal year 2028-2029, property values will be based on comparable sales. Since valuations will skyrocket, tax rates will fall to compensate.
After assessment adjustments, properties valued between $5 million and $15 million will be subject to a tax rate of 0.8%; properties between $15 million and $25 million will be taxed at 1.05%; and properties over $25 million will be taxed at 1.3 percent, according to the budget plan.
“It’s incredibly complicated,” said Robert Pollack, a New York property tax attorney at Marcus and Pollack LLP.
Billionaire and Citadel CEO Ken Griffin became the face of the tax after New York City Mayor Zohran Mamdani posted a video outside Griffin’s penthouse apartment announcing the tax. Griffin fought back, threatening to take business and jobs out of New York in the future.
Under the new tax, Griffin — who is a Florida tax resident — would see his Manhattan property tax bill more than triple, according to CNBC calculations.
Griffin purchased his 24,000 square foot penthouse at 220 Central Park South in 2019 for $238 million. However, according to government records, the city values the apartment at just $15.5 million. Griffin’s property tax bill for the 2026-2027 tax year is $858,332, according to city records.
In the first two years of the pied-à-terre tax, Griffin’s property tax bill would more than double to $1.87 million, according to Pollack. Starting in fiscal year 2028-29, that amount would increase to just under $4 million.
Griffin also purchased two apartments at 740 Park Ave. for a total of $83 million, according to reports. The tax on those units would rise to $1.1 million starting in 2028, bringing his total Manhattan property tax bill for all of his properties to more than $5 million.
While city politicians say the wealthy can afford it, real estate brokers and tax lawyers say the sticker shock will be significant.
“All of my clients already feel like they’re paying too much,” Pollack said. “These numbers are significant. I don’t care how rich you are.”