The administration of New York City Mayor Zohran Mamdani has disclosed how it plans to enforce its new so-called “pied-à-terre tax” on luxury second homes.
The New York Post reports the city’s Department of Finance (DOF) will contact the owners of the targeted properties by Aug. 30. The DOF has subpoena power and will be able to conduct audits going back six years to determine if the properties are eligible for the new tax.
One- to three-family homes worth at least $5 million and co-ops and condominiums valued at $1 million or more are subject to the tax, provided they are unoccupied non-primary residences. The DOF will be able to impose a fine equal to 50% of the tax bill if the property owners provide false information on the status of their residences.
City officials claim the tax will impact about 10,000 properties and generate between $340 million and $500 million. Property owners will have 30 days to appeal or challenge the new tax bill, either to the city’s Tax Commission or, in some cases, to the DOF.
Real estate industry professionals have argued the new tax will create problems for the boards of cooperative apartments, who would be responsible for helping collect the surcharge from shareholders or apartment owners in their buildings.
“The Department of Finance’s proposed rules highlight the serious challenges of implementing the second-home tax fairly,” said Zachary Steinberg, executive vice president of external relations and advocacy at the Real Estate Board of New York. “As the city rushes to roll out this new tax, many New Yorkers—particularly cooperative apartment owners who were never intended to be affected—may be hit with unexpected tax bills and little time to appeal.”
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