New York Gov. Kathy Hochul said Tuesday she intends to propose a new tax on New York City second homes worth $5 million or more, reviving a long-debated idea as pressure builds to raise revenue from the city’s wealthiest residents.
“As Governor, I understand the importance of stabilizing the city’s finances without compromising on essential services New Yorkers count on,” Gov. Hochul shared via statement. “If you can afford a $5 million second home that sits empty most of the year, you can afford to contribute like every other New Yorker.” Her intent was first reported by the New York Times.
It’s a notable shift for Hochul. Just weeks after resisting calls to raise taxes on top earners and corporations, she now appears to be aligning with New York City Mayor Zohran Mamdani on a narrower idea: targeting ultraluxury pied-à-terres owned by wealthy part-time residents.
That move comes after Mamdani proposed a broad 9.5% property tax increase to help close an inherited budget gap of $5.4 billion through next fiscal year if the governor did not approve new taxes on the city’s wealthiest residents and corporations—a core campaign promise that required Albany’s support.
“[It targets] the super wealthy, who can purchase properties and use them to store their wealth, to benefit from New York City’s real estate market but not have to pay back into that same city that generates so much of that wealth in the way that they should,” the mayor said during an event Wednesday morning.
The emerging agreement lands at the center of national conversation about how to tax second homes more aggressively, and persistent fears that higher taxes will drive wealthy residents—and their income—out of New York.
What are the two proposing?
A statement from the mayor’s office says the proposal would impose an annual surcharge on one- to three-family homes, condos, and co-ops worth more than $5 million, when the owner’s primary residence is outside New York City.
That would represent a very targeted slice of the second-home market and is projected to generate $500 million in annual revenue, according to the mayor’s office.
On Wednesday, Mamdani pointed directly to Ken Giffin’s $238 million Central Park South penthouse as a prime example of who this tax would target.
“The super wealthy, who can purchase properties and use them to store their wealth, to benefit from New York City’s real estate market, but not have to pay back into that same city that generates so much of that wealth in the way that they should,” Mamdani said, arguing that the tax would require them to contribute more to the city.
The mayor’s office says 93% of New Yorkers support a pied-à-terre tax. But similar efforts have failed before. The most recent push came in 2019, largely in response to Griffin’s purchase the Park Avenue penthouse that was, at the time, the most expensive home ever sold in the United States.
That proposal died in Albany after an intense lobbying campaign. Another effort, in 2014, also failed to pass.
But this time, the idea is landing amid a broader national conversation over whether second-home owners should shoulder more of the property tax burden.
Last year, Montana overhauled its property tax system to lower tax rates on primary residences and make up some of the lost revenue by raising taxes on second homes. Californians alone owned more than 5% of Montana’s taxable real estate market but paid just 3.54% of the residential property tax revenue.
Just last month, Florida Gov. Ron DeSantis also suggested that second-home owners could help offset homestead tax relief in his state.
“Some rich guy from Brazil buys a mansion in Miami—they can still be taxed,” DeSantis said on Hang Out With Sean Hannity.
NYC’s pied-à-terre market
Part of what makes proposals like this politically attractive is the severity of the housing shortage. The U.S. is currently short 4.03 million homes, according to the latest analysis from Realtor.com®. In New York City alone, the Regional Plan Association estimated in 2024 that roughly 540,000 additional units are needed.
That backdrop helps explain why occasionally used homes draw so much scrutiny. The most recent New York City Housing and Vacancy Survey found that about 59,000 units in 2023 were “held for seasonal, recreational, or occasional use,” down from about 75,000 in 2017. Even so, that total amounts to nearly 11% of the homes the city would need to help close its housing gap.
The share of residences worth $5 million or more have represented between 3.3% and 4.8% of home sales in New York City since 2019, of that segment, 63.8% to 74.1% have represented nonprimary residences, according to an analysis by Realtor.com.
But that figure is broader than the ultraluxury pied-à-terre market targeted by Hochul and Mamdani. It can include rental units and other occasionally used homes—not just vacant apartments owned by wealthy part-time residents.
How taxing the rich hits housing
“Any changes to tax policies here would not have a noticeable impact on the city’s overall market, but it could pull prices down at the top end of the Manhattan real estate market,” says Jake Krimmel, senior economist at Realtor.com.
But that impact is only part of the debate. The bigger concern may be whether higher taxes on wealthy homeowners risk pushing more high earners out of New York.
From 2019 to 2023, New York lost nearly $10 billion in annual adjusted gross income from tax filers who moved out of the state. That stretch predates Mamdani’s administration and captures only the beginning of Hochul’s term, after she took office at the end of 2021.
It’s something the governor has already expressed concern about.
“What I want to make sure, we are smart about is having a system in place where it’s not just taxing for the sake of taxing,” Hochul said at a forum in January. “I need people who are high net worth to support the generous social programs that we want to have in our state.”
Mamdani, by contrast, framed the issue Wednesday around a different kind of exodus.
“We have to reckon with the very real exodus that we are seeing in the city—an exodus of working class people, an exodus of those who cannot afford to live here,” he said.
