Pied-à-terre tax may be losing steam with legislators

A one-time transfer tax on high-priced real estate may be enacted instead

The days leading up to the adoption of the annual state budget are often filled with dramatic twists and turns, and one such last-minute change appears to be in the works—this one concerning a proposed tax on pricey (and, in many cases, unoccupied) second homes in New York City.

The Wall Street Journal reports that some state legislators are getting cold feet about passing a pied-à-terre tax, as it's known, which would affect owners of homes valued at $5 million or higher in New York City. An analysis by that paper earlier this week found that the priciest homes in the city—those valued at $25 million or above—could see their values slashed by half. (There are around 280 people within that bracket who would be affected.) The revenue generated from the tax could, in theory, be used to help fund crucial transit repairs.

The real estate industry has also waged a campaign against the tax, and it appears that lawmakers have listened. Now, according to the WSJ, they're looking at a transfer tax, which would levy a one-time fee against the priciest homes sold in the city. That could generate up to $400 million for the city, versus the reported $650 from a pied-à-terre tax (a figure that has been disputed).

The pied-à-terre tax was originally proposed in 2014, but it gained attention this year after Ken Griffin's $238 million condo at 220 Central Park South finally closed, becoming the most expensive home ever sold in New York City—and the United States. A confluence of factors—the fact that Griffin may not use the property as his primary home; the staggeringly high price; and the ongoing affordable housing crisis in the city—triggered a heated response, with legislators, the City Council, and even Gov. Andrew Cuomo signaling their support for the tax.

In an interview on Tuesday morning with WNYC's Brian Lehrer, Cuomo argued that the tax is not, in fact, losing steam; but he did acknowledge that the legislature was looking at different ways to ensure that the owners of NYC's priciest properties are paying their fair share. "There are a number of real estate, high end real estate, taxes called the pied-à-terre tax, but you could do it a number of ways. It could be a transfer tax; it could be an annual tax," Cuomo said, calling the tax "justifiable."

State Senator Brad Hoylman, who first proposed the tax, Tweeted this after rumors surfaced that the bill may be at death's door:

You have to ask: What are we here in Albany to do?

Are we here to fight for the millions of NYers who have to struggle every week to make ends meet? Who could lose their job because the subway comes too late?

Or are we here to protect people who already have every advantage?

— Senator Brad Hoylman (@bradhoylman) March 27, 2019