There are two developments of note in housing in New York City: a “new” property tax on units valued at $1,000,000 or more, commonly referred to as a “pied-a-terre” tax and the City’s new initiative on affordable housing entitled: “Block by Block: The Housing Plan for a New Era.” Neither holds good news for residents.
The former is an effort to collected approximately $380 million or more annually from between 10,000 and 13,000 “luxury” condominiums, cooperative apartments and single-family homes that serve as “second” homes in New York City. The Pied-à-Terre Tax and Its Potential Revenues – Office of the New York City Comptroller Mark Levine. For condominiums and single-family homes that are not exempt from the tax, the tax will be added to the Department of Finance accounts of the specific unit or property. For cooperative apartment buildings, which represent about 70 percent of the privately owned apartments in New York City, the tax will be added to the building’s overall property taxes and the boards of directors will have to figure out how to apportion the tax to specific units, assuming the Declarations, By-Laws and Proprietary Leases permit other than a strict percentage allocation under the governing documents. This is going to be challenge for these buildings. How these buildings will respond is an open question.
The latter is an effort to address affordable housing, by developing 200,000 new units and preserving the City’s approximately 200,000 existing units. Mamdani Unveils Sweeping NYC Housing Plan | NYC Newswire is more aspirational than a detailed plan particularly as it relates to existing housing. The sad fact is that since the 1980s, the federal government has disinvested in public housing, leaving New York City among other large cities, with major maintenance shortfalls and backlogs. The shortfall on maintenance for New York City alone is approximately $80 million in capital repairs and an annual structural operating deficit amounting to hundreds of millions of dollars. According to, RPA | NYCHA’S Crisis, this cannot be overcome without substantial new funds. The pied-a-terre tax is not likely to result in the amount of money required and may result in a devaluation of high value real estate and tax revenues.
This commentary presents a general discussion. This commentary does not provide legal advice. Please consult your attorney for specific legal advice.
By Carol A. Sigmond, Nossoman LLP
