Gov. Hochul Announces Support for “Pied-à-Terre” Tax Surcharge on Secondary NYC Homes Valued Over $5 Million

On April 15, 2026, Governor Kathy Hochul announced her support for an annual property tax surcharge on secondary homes in New York City that are valued above $5 million. This provision has broad support among elected NYC officials, most notably, Mayor Zohran Mamdani. While legislative text has not been released, both the Governor’s and Mayor’s offices have released details on the basic framework, and previous legislation can provide insight into what the structure could look like.

What We Know About the Proposed Pied-à-Terre Tax

According to the information that has been released, the tax would only apply to secondary homes in New York City that are not regularly occupied. For instance, it appears that a secondary home in the city that is rented out regularly would not be subject to the tax. The tax would apply to condominiums, co-operatives, and one- to three-family homes. The Governor’s remarks on April 15 that the surcharge applies to individuals who “do not live in the City or pay City income tax” indicate that individuals classified as NYC tax residents would not be subject to the property tax surcharge. Because NYC does not impose an income tax on nonresidents, “paying City income tax” is coextensive with being an NYC resident. The surcharge is estimated to raise around $500 million per year for NYC.

New York would not be alone in targeting secondary and non-primary residences with additional property tax burdens. Rhode Island enacted a comparable measure in 2025, colloquially dubbed the "Taylor Swift Tax", imposing an annual surcharge on non-owner-occupied residential properties valued above $1 million, effective July 2026. Montana similarly enacted legislation in 2025 imposing a higher flat property tax rate on second homes and vacation properties beginning in 2026. However, its approach differs in that it applies a differential rate structure rather than a targeted surcharge on high-value properties. These enactments may reflect a budding national trend of states using property tax policy to address housing affordability and absentee ownership, and may signal increasing legislative appetite for similar measures.

Known Unknowns on the Tax

No legislative text has been released as of April 23, 2026, leaving significant gaps in how this would be implemented. No proposed tax rates have been introduced, nor has it been made clear if there would be graduated rates of tax or a flat rate. Additionally, while the Governor indicated that there will be exemptions, the entire list of exemptions remains unclear. It is also not clear how ownership will be determined. For instance, how will the law be applied to residences owned in trust or via an LLC? These structural questions will be critical to implementation and will need to be resolved in any final legislation.

Previously Introduced Legislation

It should be noted that this is not the first time this kind of surcharge tax has been proposed on unoccupied secondary homes in NYC. Legislation was first introduced in 2014, with a similar proposal being introduced each year in the New York Assembly since. However, none of these bills reached the Governor for signature. In the absence of legislative text for the 2026 proposal, we can look to previous proposals to glean some insights.

The most recent bill akin to this proposal was introduced on January 8, 2025. That bill would have imposed an additional tax on “certain non-primary residence” properties in any New York city with a population of one million or more – effectively limiting the bill’s application to New York City.

An additional tax would have applied to any one, two, or three-family homes worth $5 million or more, based on a five-year average of the home’s market value. For these homes, the rate of tax would have been between.5%-4% of the excess market value over $5 million. For condominiums and cooperatives, the tax would have applied where the assessed value of the condominium or cooperative exceeds $300,000. For these properties, the rate of tax was between 10%-13.5% of the excess over $300,000. The legislation would allow the local legislative body to determine and establish the graduated rate schedules for the tax rate ranges.

However, the bill also provided exemptions in the following circumstances:

• The property was the primary residence of one owner, even if the property was not the primary residence of other owners.
• The property was the primary residence of either the child or the parent of any owner,
• The property was rented on a full-time basis to tenants for whom the property is their primary residence, or
• The property was held in a condominium or cooperative form of ownership, and the owner obtained an appraisal report showing the property having a value of less than $5 million in the last three years.

While legislation has been introduced in the past, it has never managed to become law. One major concern that has not been resolved in the past is how the tax could be implemented for cooperative units. Unlike condominiums, which are owned as real property and assessed at the unit level, cooperative apartments are owned through shares of stock in a corporate entity – a form of personal property. This distinction creates practical challenges regarding unit-level assessment and taxation.

Secondary Policy Purpose

While the focus has been on the ability to use the tax to raise necessary revenue for NYC to help close its estimated $5.4 billion budget gap, there may be a secondary policy purpose behind the proposed tax. As many commentators have pointed out, non-New York City resident property owners already pay higher property taxes on their properties, as they are not eligible for the NYC property tax abatement. Further increasing the property taxes on these properties may ultimately encourage owners to sell their properties to avoid these high taxes altogether. Such sales would trigger additional one-time revenue, as the combined NYS and NYC real estate transfer taxes approach nearly 6% of the consideration for residential properties valued at $25 million or more. At the same time, these units would also be potentially purchased and/or rented out to New York City residents, which could modestly ease the city’s housing crunch.

As noted, this is currently merely a proposal for the New York state budget. Budget negotiations between the Governor and New York State Assembly are ongoing, and this provision’s future is far from certain. Our team will continue to monitor these negotiations carefully. Reach out to us below to remain updated on this and other major tax legislation.