President Donald Trump is no fan of Gov. Kathy Hochul’s proposed tax on high-value second homes in New York City. But there's a chance he won't have to pay it due to the city's byzantine property valuation system.
Hochul and legislative leaders continue to negotiate the specifics of a so-called pied-à-terre tax in New York City, which Mayor Zohran Mamdani is backing as a way to generate hundreds of millions of dollars in revenue for the city as it grapples with a $5 billion budget deficit.
The governor says her proposal would apply to an estimated 13,000 city homes that are worth at least $5 million and aren’t occupied as a primary residence. But Hochul hasn’t been specific about how she’d like to see that value calculated — and it could determine whether the president’s Trump Tower penthouse would be subject to the tax.
Trump, meanwhile, has made his feelings about the tax known, posting an angry response on his Truth Social account shortly after Hochul and Mamdani discussed the proposal. He accused Mamdani, in particular, of “DESTROYING New York.”
“The TAX, TAX, TAX Policies are SO WRONG,” Trump posted. “People are fleeing. They must change their ways, AND FAST. History has proven, THIS ‘STUFF’ JUST DOESN’T WORK.”
But the details will matter — not only for Trump’s penthouse, but for thousands of other second homes across the city. It’s likely to get complicated: The governor and lawmakers may need to come up with a brand-new mechanism to determine a home’s actual market worth, as opposed to its assessed value that is often far lower.
Hochul has said the tax will generate at least $500 million a year to help the city’s finances. But she’s released few details about how she intends to make that happen as she continues to negotiate with lawmakers.
“What's important to me is to make sure that the financial situation for the city is in a good place,” state Assembly Speaker Carl Heastie said. “ This is part of the process of trying to solve the city's financial problem.”
Hochul announced her support for the pied-à-terre tax last week amid a sustained pressure campaign from Mamdani and left-leaning lawmakers and advocates to increase taxes on the wealthy.
Mamdani had been pushing for an income-tax hike. But Hochul said she went with the pied-à-terre tax proposal because it would focus on people who largely live outside New York — and in some cases, out of the country.
Democrats who control the state Legislature have been largely supportive of a pied-à-terre tax. So far, however, Hochul and legislative leaders haven’t locked down a final deal.
Determining the value of second homes remains the biggest question they have to answer.
Trump’s famous triplex on 5th Avenue provides a compelling test case.
The president had called New York his home his entire life. That ended in 2019, when he changed his primary residence from his Trump Tower penthouse in Manhattan to his Mar-a-Lago resort in Florida.
But whether the penthouse would be subject to the pied-à-terre tax depends on where Hochul and lawmakers land on valuation.
The city’s Department of Finance assigns a market value and an assessed value on each condo and co-op based on how much rental income they might generate. The assessed value is typically far below what the property would fetch on the open market.
In Trump’s case, the department assigned his penthouse a market value of about $6 million and an assessed value of roughly $2.7 million.
If Hochul and lawmakers were to use the city department’s numbers, Trump’s residence would qualify for the tax based on its market value but not on its assessed value. But it’s not likely to be that simple.
Democratic lawmakers have been pushing for a pied-à-terre tax for years. Their past proposals used a different valuation method for co-ops and condos, rather than a straight $5 million market or comparable sale value.
The prior proposals would have applied the tax to any pied-à-terre condo or coop with an “assessed value” of $300,000 or more.
The Department of Finance calculates the assessed value based on an estimate of the home’s potential rental income under decades-old state law. The proposed $300,000 figure served as a “proxy” for a home actually worth $5 million or more, since a condo’s assessed value is usually far less than its actual worth, said tax attorney Benjamin Williams, from the firm Rosenberg & Estis.
“Don’t think of it as what the property would actually sell for,” Williams said.
The $2.7 million assessed value of Trump’s triplex is well above that $300,000 mark. It’s not clear, however, whether Hochul and lawmakers will ultimately include a similar threshold for condos.
Shortly after this story published, Hochul’s press office posted on social media that the governor will craft the tax in a way to include Trump’s penthouse and similar homes.
“Trump claims this apartment is worth $200 million,” the governor’s office posted on X. “Rest assured, these are exactly the kinds of properties that will be taxed.”
Then there’s the question of whether Trump’s penthouse is occupied or not.
Until recently, Trump’s youngest son, Barron, had taken up residence in the condo atop Trump Tower. But that changed last year, when the New York Post reported he was living in the White House while attending NYU’s Washington D.C. academic center.
If Barron, or anyone else, claims the penthouse as their primary residence, that could nullify the “second home” debate — and ensure the president wouldn’t have to pay the extra tax.
Hochul, a Democrat, said Tuesday that there’s an easy way for Trump to avoid paying the tax: Move back to New York.
“He has not called me on this topic,” Hochul said of the president. “If he wants to regain his residency as a New Yorker, whatever property he has will not be subject to this. And this could be incentive for people to become New Yorkers again.”
Just how much second homeowners would have to pay under the governor's plan is still being negotiated. Hochul supports creating different brackets with different surcharge rates based on the value of a home, according to the governor’s office. But she hasn’t publicly revealed what she wants those rates to be.
The Department of Finance estimates Trump’s condo would be subject to a nearly $323,000 annual property tax bill based on the current tax rate. The pied-à-terre surcharge would add to that bill.
The governor is locked in closed-door talks with legislative leaders on the tax as part of ongoing negotiations over a roughly $260 billion state budget, which is now three weeks late.
State Senate Majority Leader Andrea Stewart-Cousins told reporters Thursday that it would be inaccurate to call the pied-à-terre tax a done deal. But she said there’s no serious opposition among the Democrats who lead the Senate and Assembly.
“We’ve always supported the pied-à-terre tax in this conference, and we continue to support it,” she said.
