Hochul’s pied-à-terre tax will hurt regular folks, retirees because of property-value fallout: critics

Gov. Kathy Hochul’s proposed pied-à-terre tax on expensive second homes is causing a stir among critics who believe it will not only affect the super-rich but also impact hard-working families and retirees who reside in the same buildings. The plan, backed by Democratic Socialist Mayor Zohran Mamdani, has garnered opposition from managers at the luxury Manhattan House Condominium on East 66th Street.

The managers of Manhattan House recently sent a letter to state Sen. Liz Krueger and other lawmakers expressing their concerns about the tax. They warned that the surtax on second homes valued at over $5 million in New York City could potentially decrease property values for all residents living in the same co-op and condo buildings. This could make the properties less attractive to future buyers, resulting in a negative impact on everyone’s property values.

According to the letter, Manhattan House represents over $1 billion in residential property value, which is not solely held by absentee investors or speculative buyers. The value is also held by residents, families, retirees, long-time New Yorkers, and owners who rely on the stability and liquidity of the New York City condominium market.

The opponents of the tax argue that it could extend beyond just impacting high-value second homes and affect existing condominium and co-op owners as well. The tax could lead to reduced market demand, valuation uncertainty, higher transaction friction, and administrative burdens for homeowners.

The proposed tax is expected to be included in the revenue bill to fund the state’s $268.5 billion budget for 2026-2027. Mayor Mamdani has been vocal in his support for the tax, even standing outside billionaire Ken Griffin’s residential property to promote it.

Manhattan House has been home to famous residents over the years, including Grace Kelly, Benny Goodman, Hugh Carey, and Imogene Coca. The management of Manhattan House has raised concerns about how the tax could impact regular families and retirees, affecting their ability to sell, refinance, or retain their homes. The tax could also impact the liquidity and stability of the New York City condominium and co-op market.

While Hochul’s office defends the levy, stating that only second homes worth over $5 million will be taxed and primary residences will not be affected, critics continue to argue against the tax. Manhattan House management has called for the tax to be removed from the budget and subjected to a rigorous public review and hearings.

Despite the opposition, Mayor Mamdani remains firm in his support for the tax, emphasizing that it will make the ultra-wealthy elite pay their fair share. However, some critics believe that demonizing business executives like Griffin is not the right approach and could have negative consequences.

As the debate over the pied-à-terre tax continues, it remains to be seen how it will impact New York City’s real estate market and its residents.