The controversial pied-à-terre tax just got a batch of new updates from the Department of Finance.
The Mamdani administration’s first effort to tax the rich raised plenty of questions and concerns from commenters, which the DOF sought to address across 12 pages of new text amendments released Monday.
The pied-à-terre tax still applies broadly to owners of homes that aren’t their primary residences in the city valued at $5 million or more. Commenters’ many questions about who is subject to the new surcharge prompted the agency to clarify some aspects of eligibility and the appeals process for owners to contest a determination of second home status, while standing firm on other key elements.
The tax went live on July 1, with second home owners subject to the surcharge to be notified by August 30.
Valuation was a hot issue among commenters who sought clarity on the DOF’s methodology for calculating eligibility. The first phase of implementation will still use share ratios per state statute to determine the value of co-op units, despite commenters’ concerns that it would allow an outlier penthouse or other high-dollar property to skew their neighbors’ valuation.
DOF also declined to extend the window for a primary residency appeal, noting that the 30-day “time period incorporated into this rule appropriately balances due process and operational efficiency in implementing the surcharge.” The agency revised the rule to state that any initial determination notice sent to eligible second home owners will now include the value of the projected surcharge, along with the deadline for submitting an appeal.
Methods for proving primary residency also broadened under one of the rule amendments, allowing spouses, month-to-month renters or subletters to document that they occupy the unit. DOF declined to expand the types of documents they would accept as proof, clarifying that tax returns are adequate if they are the occupant’s most recent state or federal return before the filing of the appeal.
“DOF did clarify in this final rule that an arm’s length transaction does not include one for which circumstances indicate a reasonable possibility that the lease or sub-lease was entered into primarily for the purpose of avoiding imposition of the surcharge,” the agency said of refusing to add a safe harbor provision.
The DOF did not amend the rules about one major issue. New purchasers of homes that fall under the statutory definition of a pied-à-terre may still be on the hook for surcharge payments from a previous owner. The DOF declined to change the text due to state law requirements that the surcharge be imposed on the property itself, rather than a particular owner, as reported by my colleague Caroline Spivack in Policy Pro.
What we’re thinking about: Does the recent raft of rule amendments demystify the pied-à-terre tax? Share your lingering questions with me at ben.miller@therealdeal.com.
A thing we’ve learned: New York City’s Webster Hall is widely considered the first modern nightclub. Built in 1886 on the Lower East Side, the venue was rented out to working-class people for dances, lectures, concerts and union rallies.
— Spencer Davis
Elsewhere…
— The New York Times Editorial Board announced its support for the pied-à-terre tax in an editorial Monday, writing that “raising taxes on the very rich is among the most obvious, least economically damaging and most politically popular ways to address the problem.”
— New York City Comptroller Mark Levine blasted New York City’s rent freeze after the city’s Rent Guidelines Board voted to freeze one- and two-year rent-stabilized leases last month, writes the New York Post. “The problem is we just have a shortage of supply of homes in New York City … In rent-stabilized buildings, we have tens of thousands of apartments that are sitting vacant,” Levine said Sunday on 77 WABC’s the “Cats Roundtable” program.
— Mayor Zohran Mamdani rolled out a slate of 50 changes Monday aimed at making it easier to open and operate a small business in New York City, amNY reports. The package, called OPEN for Small Business, targets fees, fines, licensing requirements and delays affecting the city’s small businesses.
— Spencer Davis
Closing time
Residential: The most expensive residential sale recorded Monday was $35 million for 141 West 11th Street, unit 141. The Greenwich Village condo is 7,400 square feet. The buyer was listed as Bodega Flowers LLC.
Commercial: The most expensive commercial transaction was $109 million for several Crown Heights commercial units at 409 Eastern Parkway. The apartment building is over 197,000 square feet. The selling companies were tied to Omri Sachs of Adam America Real Estate, Yehoshua Fruchthandler and Zev Marmurstein. REIT GO Residential acquired the units, per reports.
New to the Market: The highest price for a residential property hitting the market was 175 Fifth Avenue, Unit 17. The Flatiron Building condo is 7,700 square feet and is a new development. Corcoran Sunshine Marketing Group has the listing.
Breaking Ground: The largest new building permit filed was for a proposed 74,319-square-foot, 15-story residential building at 5-52 44 Drive in Long Island City. S. Wieder Architect is the applicant of record.
— Joseph Jungermann
