Mayor Zohran Mamdani’s pied-à-terre tax already has homeowners, lawyers and realtors pleading for greater clarity and transparency.
The Department of Finance held a public comment hearing Thursday, and many parties shared their thoughts and concerns — here are just a few.
The new surcharge on second homes amounts to a “confiscatory and half-baked money grab,” said Peter Blond, a partner at Brandt, Steinberg, Lewis & Blond LLP.
“When there is a significant renovation, let’s say a $20 million penthouse renovation, DOF practice in a cooperative setting has no choice when they wish to assess a physical alteration, as they must effectively punish the cooperative’s entire ownership at large for one unit owner’s gut reno,” Blond said.
Initial determinations of who will be subject to the new surcharge are due by August 30, but a DOF official wouldn’t answer commenter questions at the hearing as to when final rules would be released.
“Failure to preemptively consider tax return data in 2026 will greatly increase the chance of errors in determining primary residence during this initial implementation period,” Rebecca Poole, director of membership and communication for the Council of New York Cooperatives and Condominiums, said. This concern, she added, is exacerbated by the fact that people subject to the tax will have a 30-day deadline to reply — “when many taxpaying New York residents are on vacation.”
Any final rule should extend the initial response period for notices received before the end of August by 60 days and provide a second notice to those who haven’t responded after the first 30 days, Poole said.
Commenters also raised technical suggestions for administering the new surcharge. Warren Dubitsky, a lawyer at Herman Katz, encouraged the city to provide specific explanations of how it determines unit value, the amount of the tax and a description of ways owners can contest the tax if they believe they are wrongly covered. These explanations could be modeled after pre-existing DOF notices of property value, but more specifically tailored to non-primary residents eligible for the new surcharge.
The rules should also safeguard certain edge cases, including an “innocent purchaser” who buys a property that was previously used as a pied-à-terre but plans to use it as their primary residence. The statute has a six-year lookback and audit provision, which leaves the possibility that new purchasers could be subject to the tax from a previous owner. Similarly, Dubitsky explained, a buyer could also be penalized if the unit is uninhabitable during construction or renovation.
And then there’s the question of trusts. “Thinking in terms of partners or spouses, establishing a trust to own their residence, that type of circumstance should allow the couple to qualify as covered owners and allow that space to be considered a primary residence,” Zal Kumar, a principal at Ernst & Young who specializes in tax, said at the virtual hearing.
After a spouse or parent dies, a sole occupant should qualify as the beneficial owner and indirect ownership through an LLC shouldn’t prevent a beneficiary of a trust from being a covered owner or qualifying the property as their primary residence, Kumar said.
Co-op resident K. Burke called on the DOF to create a user-friendly website that uses plain language to assist individual co-op owners seeking to find out their actual valuation under the agency’s method for determining surcharge eligibility.
“I’m a layperson — it’s impossible for me to even understand the value that DOF will assign to an individual co-op, since there’s been no recent arm’s length transaction,” he said. “We need transparency if we’re to understand what our potential liability will be, and right now as far as I can tell I have no way to find out what the valuation will be for our unit.”
What we’re thinking about: Do you think any of your neighbors will be surprised to receive notice that they are subject to the pied-à-terre tax? Do you live in a co-op? Let me know at ben.miller@therealdeal.com.
A thing we’ve learned: The Department of Transportation is hiring an engineer to fix the crumbling triple cantilever section of the Brooklyn-Queens Expressway. Mayor Bill de Blasio warned in 2018 that the less-than-half-mile stacked part of the highway could collapse by 2026 under the weight of the 130,000 cars and trucks that drive over it every day.
— Spencer Davis
Elsewhere…
— More workers were injured during construction of the office-to-residential conversion of the former Pfizer headquarters than the DOB reported, reports the City Reporter. In the wake of the site’s emergency evacuation over a feared collapse earlier this week, the publication found nine additional worker injuries beyond the three reported to the agency.
— A former City Council intern has filed a class action claim in federal court seeking to get compensation for the work she and other unpaid interns have performed over the years, reports amNY. The former intern, Mina Farahmand, was fired from her job as a legislative intern for Council Member Harvey Epstein after she sent a petition to Speaker Julie Menin advocating that interns receive a $32-per-hour wage and benefits like health insurance.
— After years of attempts, legislation to officially ban horse-drawn carriages in New York City is gaining momentum, writes City & State. City Council members, including Oswald Feliz, Lynn Schulman and Kamillah Hanks, have joined as sponsors, bringing it closer than ever to a majority.
— Spencer Davis
Closing time
Residential: The most expensive residential sale recorded Friday was $45 million for 48-50 West 69th Street. The Upper West Side mansion is 19,600 square feet and sold for a steep haircut from its original listing price of $85 million. Compass’ Jim St. André, Trevor Stephens and Michael Maniawski have the listing.
Commercial: The most expensive commercial transaction was $104.5 million for 1 Whitehall Street in FiDi. Nathan Berman of MetroLoft, developer of the infamous Pfizer building, and Idan Ofer of Quantum Pacific Group closed on the 20-plus-story office building. LoanCore Capital is the seller.
New to the Market: The highest price for a residential property hitting the market was $47.5 million for 944 Fifth Avenue, Unit 11. The Lenox Hill co-op is listed by The Corcoran Group’s Cathy Franklin.
Breaking Ground: The largest new building permit filed was for a proposed 69,221-square-foot, 15-story residential building at 62 East 193rd Street in Fordham North. Architect Nikolai Katz is the applicant of record.
— Joseph Jungermann
