New details released Thursday about Gov. Kathy Hochul’s proposed second-home tax in New York City revealed the plan could impact far more property owners than originally expected, drawing criticism from lawmakers and real estate groups, as reported by The New York Post.

The proposal, developed alongside New York City Mayor Zohran Mamdani, would create a new “pied-à-terre” tax targeting second homes in the city.

According to details released by Hochul’s office, the tax would apply to condos and co-ops with assessed values exceeding $1 million and one-, two-, and three-family homes assessed at more than $5 million.

Trump's Sovereign Wealth Fund: What Could It Mean For Your Money?

The plan marks a major shift from Hochul’s earlier position opposing new taxes and follows negotiations tied to ongoing state budget talks.

State lawmakers expressed frustration that they reportedly learned details of the proposal through media reports instead of directly from the governor’s office.

“This budget process is broken. It needs to be fixed,” Leroy Comrie said.

“We should know these things. It shows a level of disrespect.”

FREE Gun Law Map: Laws Don't Pause During Social Unrest

The proposed tax emerged after Mamdani’s earlier plan to raise taxes directly on millionaires reportedly lost support, including opposition from Hochul. Instead, officials shifted toward taxing luxury second homes.

Initially, Hochul and Mamdani presented the proposal as targeting properties valued at $5 million or more, which state officials estimated would affect roughly 13,000 properties and generate approximately $500 million annually.

However, New York City Comptroller Mark Levine disputed the revenue estimate, saying the tax would likely generate between $340 million and $380 million per year instead.

Under the proposal, second homes classified as one-, two-, or three-family residences with assessed values between $5 million and $15 million would face a 0.8% surcharge.

Properties valued between $15 million and $25 million would face a 1.05% surcharge, while the highest-value homes would face a 1.3% surcharge.

Officials said a part-time New York City resident with a single-family home assessed at $11.5 million would pay roughly $92,000 annually under the plan.

The proposal places heavier taxes on condos and co-ops. For the first two years, those properties would be taxed using a city-assessed “market value” system.

Units with assessed market values between $1 million and $3 million would face a 4% surcharge, while units valued above $5 million would face a 6.5% surcharge.

Hochul’s office argued that because of New York City’s complicated property tax system, a condo with a $1 million assessed market value may actually sell for closer to $5 million.

The governor’s office estimated the revised plan would impact between 8,000 and 10,000 properties citywide.

James Whelan criticized the proposal, warning it could discourage home sales and transactions.

“On the back of $500 million in a new second-home tax, putting even more costs on home buyers and sellers will further discourage transactions and threaten existing revenue collected by the State, City, and MTA,” Whelan said.

Real estate attorney Erik Zaratin predicted the proposal would lead to more legal challenges from property owners contesting assessments and tax bills.

The opinions expressed by contributors and/or content partners are their own and do not necessarily reflect the views of Objectivist. Contact us for guidelines on submitting your own commentary.