Gov. Kathy Hochul shocked the industry earlier this week by proposing an annual tax on pied-à-terres in New York City, targeting second residences valued at $5 million or more.
Hochul isn’t the first New York politician to champion the levy as a way to pad the city’s coffers, though previous iterations never came to fruition. Before it becomes state law, the governor’s plan will need legislators’ approval, which it is likely to get.
While the proposal aims to help fill a $5 billion city budget deficit, in the aftermath of the announcement, luxury agents and developers warned it may have the opposite effect if it drives away wealthy buyers, whose purchases and spending in the city boost its income.
If the state does implement the tax, it’ll join a list of other global locales where officials have imposed similar fees, some of which have yielded troubling results for those working at the high end of the real estate market.
In Singapore, pied-à-terre buyers face steep taxes on their purchases, with the country’s citizens paying 20 percent on their second home purchase, permanent residents paying 30 percent and foreign investors paying a whopping 60 percent.
“It killed the luxury market,” said Leven’s Jeremy Hu, who represents clients in New York, Singapore, Hong Kong and other international markets. “The whole ecosystem is affected.”
Singapore first implemented a pied-à-terre tax more than a decade ago, and over the years, lawmakers have pushed those percentages higher, with the latest increase passed in 2023. Hu warned that investors familiar with Singapore’s history could be wary of parking their cash in New York City real estate for fears that, once passed, legislators will continue to raise the tax.
“Not that New York will go this route, but investors might think this is unstable,” Hu said. “Is [the state] going to be adding on in the years to come?”
While Singapore upped its taxes, Hong Kong, in the midst of a housing slowdown, eliminated its roughly 8 percent tax on pied-à-terre purchases in 2024, a move, alongside other tax removals, that Hu said helped revive the market.
“Immediately, the market went up, and prices stabilized,” Hu said. “Everyone jumped in and enjoyed the party.”
Vancouver passed its own version of a pied-à-terre tax, also known as an empty home tax, in 2017, which in the years since has produced mixed results, according to an article published by a senior policy associate with the CUNY Institute for State and Local Governance. The tax was passed, in part, as a solution to help Vancouver’s housing scarcity crisis.
The article references a 2024 study by the City of Vancouver that found that while the program was successful in raising revenue for the city — nearly $170 million between 2017 and 2023 — it’s unclear whether the program had a significant impact on the housing market.
The city logged a nearly 60 percent decrease in vacant homes during the period, but as the article’s author acknowledges, it’s unclear whether that means those homes were sold or rented to residents or if their owners found a loophole to change their declared residency status. Another study published by the C.D. Howe Institute found the tax had no effect on lowering rents in the city or spurring developers to build new units.
Though what’s happened in other markets could give New York some clues as to the effects, the taxes aren’t an apples-to-apples comparison. For one, Singapore’s tax functions more like a mansion tax, which already exists in New York state for purchases above $1 million, rather than Hochul’s proposal to tax homeowners every year.
The governor’s plan also only applies to homes at the very top of the city’s market, rather than pied-à-terres more broadly, which may not push buyers away entirely but shift their focus to properties at lower price points. Wealthy buyers could also find ways to circumvent tax laws, as some industry insiders predicted earlier this week.
Still Hu, like other brokers, says it might be best not to tamper too much with the city’s appeal to those with the cash to spend on second, third, fourth or beyond homes.
“People always talk about empty apartments, but those empty apartments are paying taxes, and that’s benefiting everyone,” Hu said. “Why kill the golden goose when you should make the golden goose more comfortable so it produces more golden eggs?”
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Inventory in the Hamptons is the “worst” Tyler Whitman’s seen since he and his business partner, Dana Trotter, set up an East Hampton franchise of The Agency three years ago. Listings in the South Fork dropped 10 percent in the first quarter, compared to the same period last year, with the market’s highest end taking on a significant share of the decline.
With fewer homes on the market, brokers in the Hamptons closed fewer deals, but that didn’t keep a few big-ticket trades from crossing the finish line, including the $72 million sale of an oceanfront mansion on East Dune Lane. Instead, the little inventory that did move during the three-month period was at the top of the market, with the share of deals over $5 million hitting a record high.
NYC Deal of the Week
The most expensive deal to land in the city register this week was for a unit at 15 Central Park West, which closed for $25.1 million. The apartment was sold by psychiatrist Pamela Cantor, who bought it with her late husband, financier Richard Cantor, for just under $14 million in 2007.
Unit 12C spans 3,400 square feet and has three bedrooms and three bathrooms. It also features a terrace and Juliet balcony.
Engel & Völkers’ Mercedes Berk Team had the listing.
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