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Manhattan, New York City Manhattan, New York City. (Photo: Shutterstock.com)

The economic shutdown triggered by the COVID-19 pandemic has resulted in an astonishing $14 billion budget deficit in New York, with projections of up to $30 billion by 2022, according to New York Governor Andrew Cuomo. In efforts to minimize the cash flow crunch and increase capital funding of the state’s economy, state legislators have turned to the New York City real estate market for relief. Most relevant is the revival of the “pied-à-terre” property tax surcharge on qualifying non-primary residences within the state.

“Pied-à-terre,” (French for “foot on the ground”) typically describes a secondary residence, often an apartment or condominium, in a city different from an individual’s primary residence. For example, a suburban homeowner may own a pied-à-terre apartment in a neighboring city to facilitate commuting for work or the occasional weekend visit. According to the New York City Housing and Vacancy Survey conducted in 2017, the city had as many as 75,000 pied-à-terre. A large segment of the pied-à-terre market in New York City consists of luxury, high-end real estate located in some of the city’s most sought-after neighborhoods.

The Pied-à-Terre Legislation

The pied-à-terre tax has been a controversial issue since 2014, when New York State Senator Brad Holyman originally sponsored the bill. In January 2019, partly in response to Ken Griffin’s purchase of a $238 million apartment near Central Park, Senate Bill S44A was introduced to the New York Assembly. This bill proposed an annual property tax surcharge on pied-à-terre, including one-to three-family second home residences worth $5 million or more and condos and cooperative units with assessed values over $300,000. The projected annual revenue from the tax (estimated at $650 million, which could translate into $9 billion in bond revenue) was intended to subsidize citywide services.

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