In a latest research report, New York City Comptroller Mark Levine stated that if the proposed property tax on “second homes” worth over 5 million USD is implemented, only 340 million USD can be collected, thus additional tax measures are necessary to meet the state governor’s plan of 500 million USD.
Levine indicated that even though the final tax rate categories and tables may vary from those used in his analysis, “the required tax revenue growth to raise five hundred million dollars seems quite substantial.”
The real estate industry also holds a reserved attitude towards the policy. Jim Whelan, president of the Real Estate Board of New York (REBNY), noted that the analysis once again shows the difficulty in achieving expected revenue from the second home tax. Identifying second homes, evaluating cooperative apartments, and changes in behavior pose implementation challenges. Hasty implementation may lead to decreased investment and housing supply, weakening both the city and state government’s revenue.
This policy was introduced by Governor Ho Chu in early April, pledging to bring approximately 500 million USD in revenue to New York every year. Ho Chu mentioned that the tax rates are likely carefully designed to ensure the desired revenue target is met. Mayor Mamdani also believes that these funds are “crucial” in offsetting the city’s current 5.4 billion USD budget deficit over two years.
In response to the Comptroller’s latest report, a city government spokesperson stated it effectively demonstrates the feasibility of the governor and mayor’s policies, saying, “The City Comptroller’s report clearly states one thing: purposeful crafting and implementation of this legislation can achieve this goal.”
According to Levine’s report, there are a total of 19,000 eligible second properties in New York, with a value of over 3 million and at least 5 million USD, accounting for 1.5% of the city’s residential properties, mostly located in Manhattan. Consideration of the properties’ use would reduce the total number of real estate properties subject to the tax to around 11,200.
If the new tax structure is similar to previous legislative proposals, property owners could see their annual tax bills rise from 5,200 USD to over 117,000 USD. The median increase in tax amounts for all potentially affected apartment owners is around 27,000 USD, 40% higher than their current annual property tax payments. The Comptroller’s office found that standalone homeowners may face even larger property tax increases, with median increases potentially reaching 50%.
Levine’s report is the most detailed analysis to date on the potential number of properties that could be subject to the second home tax. Despite serving as part of the state budget, the tax collection structure is still under discussion.