NEW YORK CITY—Despite giving the real estate industry a scare, sources say Mayor Bill de Blasio is unlikely to pass proposed legislation to add a tax to pieds-à-terre.
“My understanding is a luxury tax for absentee landlords is not going forward,” an unnamed source tells the New York Post. “The absentee-landlord tax is a nonstarter.”
The mayor's office is reviewing the proposal as it prepares its legislative agenda for the state. This past September, State Senator Brad Hoylman announced that in January he would formally present a plan by the Fiscal Policy Institute that would allow the city to tax pieds-à-terre at a 0.5% to 4% rate, depending on the value of the property. Non-residents of the city who own homes here worth between $5 million and $6 million would be subject to a surcharge equal to half a percent of the value of the unit.
Proponents of the plan contend that the surcharge would raise $665 million a year for the city. The FPI says wealthy foreign buyers have been buying up property in Manhattan as vacation homes but pay no income taxes and low property taxes due to exemptions and the city's tax code. It points to a report by the Independent Budget Office that found some of Manhattan's newer residential developments have as much of 50% of their inventory in pieds-à-terre.
But the levy would “kill the golden goose,” said Bob Knakal, chairman of Massey Knakal Realty Services, during a recent presentation. Members of the industry fear that the tax would blow up the luxury market as property owners could see new fees as a penalty and look to get out of units at low prices or it could steer prospective buyers away from buying luxury apartments.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
