Mayor Zohran Mamdani’s administration last week set off a wave of anxiety when it published a list it stated was “related” to a new pied-a-terre tax on luxury second homes in New York.
The list included more than 900,000 properties and was so broad it included the Flushing, Queens, home of Richard Lee, Mamdani’s finance commissioner, whose agency put out the list. A rowhouse former Mayor Bill de Blasio owns in Park Slope also made the list.
Simultaneously, tens of thousands of homeowners on the list began receiving ominously worded letters from the Department of Finance stating, “Our records indicate that the property referenced above may be subject to the new surcharge,” threatening longtime New Yorkers with a new tax if they can’t adequately prove residency.
The “j’accuse” letters give property owners four weeks to prove they actually live where they say they live to avoid paying what could amount to thousands of dollars more above what they already pay in property taxes.
The city’s new pied-a-terre tax is expected to raise $500 million as the Mamdani administration looks to plug an estimated $8.8 billion budget gap next year. The democratic socialist won office in part on an agenda to raise taxes on the wealthy and corporations, but Gov. Kathy Hochul, while agreeing to the tax on second homes, has so far stymied Mamdani’s demands for other increases.
‘They Live Here Full Time’
A wave of anxiety swept owners of residential properties and co-op units who received warning letters demanding proof of primary residency. Some homeowners erupted after the administration published its roster of potentially eligible properties, accusing the Mamdani administration of performing zero due diligence before putting them on the list.
“I have full-time residents calling me” who got warning letters, said Councilmember Gale Brewer, D-Manhattan.
Brewer didn’t receive a letter herself but nevertheless found the Upper West Side brownstone she’s called home since the 1990s on the list. Constituents who reached out who’d received a warning letter told her they fear an uphill struggle to prove their properties are not second homes.
“They have to fill out paperwork and call lawyers and pay them to get help with old documents,” Brewer said. “They live here full time.”
‘Verify First’
Gail Gregg has lived in her co-op apartment near Central Park on the Upper West Side since 1992, and in New York City since 1981.
Gregg’s letter arrived Monday. Her first thought was why the agency couldn’t check that she qualified for the city’s condo and co-op tax abatement — which is only available for primary residences.
“This letter is from the Department of Finance and all of these records are sitting right there in the same computer,” she told The City Reporter. “Why were they not crosschecked?”
Gregg said she found the finance department website unusable when she tried to submit proof that her apartment is her primary residence.
Councilmember Frank Morano, R-Staten Island, said he’s been fielding calls from constituents who found themselves on the list and questioned why the Mamdani administration didn’t do a better job vetting properties.
“My concern isn’t that people have to prove where they live,” Morano said. “My concern is the sequence. The city should verify first.”
How the New Tax Works
Finance department spokesperson Ryan Lavis said in a statement: “As per State law, the supplemental property tax roll was published for public inspection. From this list, DOF identified properties that may be subject to the surcharge. Anyone who has received a DOF letter is encouraged to inquire or appeal if they believe their property meets the criteria for an exemption.”
The letters and the finance department’s website both list specific exemptions from the pied-a-terre surcharge, which applies to properties worth more than $5 million that are not primary residences.
The surcharges on residential properties range from 0.8% to 1.3% of the property’s market value on a sliding scale that depends on the property’s value. For a $5 million residential property, that would amount to a $40,000 surcharge.
For co-ops and condos it’s even steeper. Any unit whose market rate is worth more than $1 million but less than $3 million faces a 4% surcharge, with the rate sliding north to 6.5% for units valued at $5 million or more.
The owner must provide proof that the property is their primary residence, or that it’s the primary residence of a tenant, immediate family members of the owner, the sole beneficiary of a trust or one or more individuals who hold the majority interest in a limited liability corporation that claims ownership of the property.
Deadlines Loom
The finance department website is clear that property owners only have to submit their most recent state or federal tax return to prove primary residency, but finding out what documents to provide for the other categories is a bit more difficult.
The results are multiple clicks into the site and inside the Frequently Asked Questions.
Former Mayor de Blasio didn’t return a call for comment about his rowhouse.
In response to The City Reporter’s questions, finance department spokesperson Jae Ko offered more details.
If the property is a tenant’s primary residence, the owner must submit a copy of the lease and a “rental document” such as a utility bill or proof of rent payment. For family members the owner must provide a birth certificate, marriage certificate, or immediate family member affidavit. For a trust beneficiary the owner must provide a trust agreement, while with LLC members the owner must provide an LLC operating agreement, articles of incorporation, partnership agreement, or majority interest affidavit.”
Time is of the essence, however. The deadline to do all that is just weeks away: Aug. 21 for residential properties and Aug. 24 for co-ops.
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