Pushback to Tax on Rich Absentee Co-op and Condo Owners

A proposed pied-à-terre tax on wealthy, largely absent owners of high-end co-ops and condos has been gaining political momentum, including the endorsement of Governor Andrew Cuomo, Mayor Bill de Blasio and Assembly Speaker Carl Heastie. Legislation now before both chambers of the state Legislature calls for imposing an annual surcharge of 0.5 percent to 4 percent on the market value of residences worth $5 million or more. It’s estimated that such a tax would generate $9 billion over the next decade toward fixing New York City’s broken subway system – which those wealthy, largely absent owners of luxury real estate rarely use. 

Now comes the pushback to the rising chorus of “Soak the rich,” Crain’s reports. The fiscally conservative Citizens Budget Commission (CBC) has joined forces with the Real Estate Board of New York to try to derail the locomotive of support for the tax, which is likely to be part of the state budget due April 1. 

"The property tax should be levied based on the characteristics of the property, not its ownership," the CBC argues in a blog post. "A pied-à-terre tax is not a substitute for real property tax reform that increases equity." 

The group worries that the levy would further weaken the enervated luxury housing market and deter rich, part-time New Yorkers who contribute to the economy in other ways. Also troubling to the commission was Cuomo's suggestion that the state allocate the tax's revenues to the MTA. This fails to address the vast bureaucratic and labor inefficiencies that bloat the authority's costs, the CDC says, and it would set a precedent for using "piecemeal" cash-gathering approaches to fund the system instead of receipts from sources directly connected to commuters and transit.