The 220 Central Park South building (center) in New York, USA, on Wednesday, January 23, 2019. Days after purchasing one of London’s most expensive residential properties, Citadel founder Ken Griffin has set a US record with a $238 million penthouse at 220 Central Park South.
Gina Moon | Bloomberg | Getty Images
New taxes on second homes in New York City will be more than double the property taxes paid by many wealthy luxury apartment owners, tax experts say.
The state Legislature passed a tax on non-hometown homes Wednesday to fill the city’s budget gap. The so-called pied-a-terre tax would be levied on second homes worth more than $1 million. It is expected to generate revenue of $500 million.
The property tax will be implemented in two different phases, according to tax details obtained by CNBC. For the first two years (tax years 2026-2027 and 2027-2028), condominiums and co-ops valued at $1 million or more by the City Finance Department will be subject to the tax. Real estate worth between $1 million and $3 million is subject to an annual tax of 4%. Estates valued between $3 million and $5 million are subject to a 5.25% tax. Those making more than $5 million are subject to a 6.5% tax.
While the taxes seem high, experts say the city’s outdated assessment and valuation system vastly underestimates the value of properties, making them less burdensome. The assessed value of a city is often less than 10% of its actual market value.
Rather than overhauling the system immediately, the city plans to update assessments and taxes in stages according to the budget document. From tax year 2028-2029, real estate values will be calculated based on comparable sales. As assessed values skyrocket, tax rates will fall to compensate.
The 0.8% tax rate applies to properties valued between $5 million and $15 million, after valuation adjustments. Estates valued between $15 million and $25 million are subject to a 1.05% tax. According to the budget plan, real estate worth more than $25 million would be subject to a 1.3% tax.
“It’s incredibly complex,” says Robert Pollack, a New York property tax attorney with Marcus & Pollack.
Billionaire and Citadel CEO Ken Griffin became the face of taxes after New York City Mayor Zoran Mamdani posted a video announcing them in front of Griffin’s penthouse apartment. Mr. Griffin fired back, threatening to pull business and jobs from New York in the future.
Under the new tax, Mr. Griffin, a Florida taxpayer, would more than triple his Manhattan property tax bill, according to CNBC calculations.
Griffin bought the 24,000-square-foot penthouse at 220 South Central Park in 2019 for $238 million. But government records show the apartment complex in the city is valued at just $15.5 million. Griffin’s property tax bill for the 2026-2027 tax year is $858,332, according to city records.
In the first two years of the pied-a-terre tax, Griffin’s property tax bill will more than double to $1.87 million, Pollack said. It is expected to increase to just under $4 million starting in the 2028-2029 tax year.
According to reports, Mr. Griffin also purchased two apartment buildings at 740 Park Avenue for a total of $83 million. Taxes on those units will be $1.1 million starting in 2028, bringing the total Manhattan property taxes on all of his properties to more than $5 million.
City politicians say the wealthy can afford it, while real estate agents and tax accountants say the sticker shock will be significant.
“All of my clients feel like they’re already paying too much,” Pollack said. “These numbers matter. I don’t care how rich you are.”
