A new tax on NYC real estate sales aimed at helping Mamdani close city budget gap

Josephine Stratman, New York Daily News on May 14, 2026

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State lawmakers are planning a new tax on some New York City homes purchased in cash, state Assembly Speaker Carl Heastie said Thursday, as new details about the governor’s planned pied-à-terre tax were also revealed.

That new surcharge is expected to be included in the state budget, which is now more than six weeks late.

The tax on cash sales of real estate of $1 million or more is part of the package from the state intended to help close the city’s multibillion-dollar budget gap, Heastie told reporters in Albany Thursday.

“ That was part of the plan to help close the city’s deficit,” Heastie said of the tax, which is intended to be similar to a mortgage tax.

The new tax would assess a surcharge of 1% of the sale price for city homes purchased in cash for at least $1 million. The initiative is expected to generate $160 million annually, Mike Whyland, a spokesperson for Heastie, said.

While the tax would initially only apply to the five boroughs, state lawmakers are discussing expanding it statewide.

The news of the new tax came as Gov. Kathy Hochul pitched lawmakers a plan to roll out the pied-à-terre tax on luxury second homes on properties that have a “market value” of $1 million or more. “Market value” is an imperfect metric that consistently undervalues — so, the governor’s office argues, a $5 million home would have an assessed market value of $1 million.

“Governor Hochul has proposed a commonsense approach to support New York City and protect the services millions of families rely on,” Jen Goodman, a spokesperson for the governor, said. “We’re asking some of the wealthiest people in the world to contribute a bit more to generate targeted revenue while avoiding unintended consequences for New York’s tax base.”

The tax would be enacted in phases. For the next two years, second homes with a “market value” of $1 million or more would be assessed a minimum surcharge of 4% of their current assessed market value.

When the tax is fully rolled out, properties would be assessed on a sliding scale, with homes valued between $5 million and $15 million paying a surcharge of 0.8%; properties valued between $15 million and $25 million paying a surcharge of 1.05%; and properties valued at $25 million or above paying a surcharge of 1.3%.

The tax was first announced in April, but details of how it would actually work or be implemented were scarce in the following weeks. The surcharge is intended to bring in $500 million annually for the city. Details of the tax were first reported by The New York Times.

After the first two years of the pied-à-terre, the city and state would work together to create a new valuation system, the governor’s office said.

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