The 'pied-à-terre' tax arrives in New Yorkers' mailboxes: Mamdani confirms start of collection for homes valued over $5 million

Thousands of owners of luxury second homes in New York began receiving a notice in the mail that many had feared since May: the city has already targeted them to collect the new "pied-à-terre" tax. The socialist mayor Zohran Mamdani confirmed that the first letters had been sent and publicly celebrated this as the fulfillment of a campaign promise.

The city's Department of Finance (DOF), together with the mayor's office, reported that on Thursday it began notifying owners of single-family homes, condominiums, and co-ops who may be subject to the tax if they maintain a primary residence other than that property. The measure, agreed upon in April between Mamdani and Governor Kathy Hochul, was approved by the state legislature in May as part of the annual budget and aims to close a historic budget shortfall in the city's accounts.

"When I came into office, I made clear that our City would need long-term solutions to our city's long-term fiscal challenges," Mamdani said on 'X'. "On Tax Day earlier this year, I promised that we would tax the rich, and with our new pied-à-terre tax, that is exactly what we have done."

The tax applies to homes valued at $5 million or more that are not the owner's primary residence, with a progressive rate ranging from 0.8% to 1.3% annually. City Comptroller Mark Levine estimates that it will affect about 11,000 properties, of which only 515 are co-ops. The city estimates annual revenue of $500 million, which Mamdani allocated to fund parks, libraries, and schools. DOF Commissioner Richard Lee assured that the administration will implement the collection "fairly and efficiently," and explained that 13 new positions were added to his department and 11 more to the Office of Administrative Tax Appeals to handle the process.

Notified property owners will have until August 30 to find out the amount they must pay and only 30 days to challenge the assessment, with bills due in January 2027. That tight deadline has been, in fact, one of the main targets of criticism. Tax attorneys and real estate brokers, who gathered weeks ago at a public hearing held by the DOF, described the measure's regulations as confusing and haphazard.

"A confiscatory and half-baked money grab," was how tax attorney Peter Blond described it, referring to the lack of clarity regarding cases such as properties held in trust or units temporarily vacant due to renovations.

The announcement also sparked a wave of negative reactions on social media, where users accused Mamdani of pushing a "confiscatory" policy against private property and warned that the measure will ultimately drive the wealthiest to continue moving to states without income tax, such as Florida or Texas, in a capital flight phenomenon that, according to his critics, will end up driving up real estate prices for the rest of New Yorkers.

Others questioned the lack of a clear definition of what constitutes "paying your fair share", the concept Mamdani uses as the measure's slogan.

Governor Hochul, on the other hand, came to the defense of the new tax: "Working New Yorkers already do their part. That's why I made sure owners of ultra-luxury second homes contribute more to the city that makes New York the greatest in the world."