Second Homes Taxes Spread as Cities Target Vacant Properties

Second homes taxes are rising as US cities target vacant properties to address budget gaps and housing shortages, sparking industry debate.

May 4, 2026

Jordan B.

Second homes taxes are being proposed or enacted in major US cities and states to address housing shortages and budget gaps.
Measures include New York’s pied-à-terre tax, Rhode Island’s “Taylor Swift tax,” and San Diego’s proposed vacant property levy.
Supporters say the taxes create incentives to rent out underused homes, but critics warn of impacts on local economies and homeowners.
Evidence from cities like Vancouver shows some success in reducing vacancies, but overall impact remains modest.

Key Takeaways

Tax Momentum Grows

The WSJ reports that state and local governments are expanding second-home taxes. They aim to address housing shortages and fill budget gaps. New York City plans a pied-à-terre tax. It will apply to properties valued at $5M or more.

Meanwhile, Rhode Island passed a new measure. The so-called “Taylor Swift tax” targets homes over $1M. It applies if owners leave them vacant for more than half the year. The policy takes effect in July. In addition, San Diego plans a ballot measure on vacant homes. The tax would start at $8,000 annually. It would rise to $10,000 by 2028.

Policy Debates Intensify

Proponents of second homes taxes argue that encouraging owners to rent out vacant or underused properties could help shift inventory to the long-term rental market, increasing availability. Officials in cities implementing these taxes say homes should be lived in, not left empty, particularly during housing crises. However, some homeowners and industry stakeholders say taxes threaten to drive away spending from wealthier buyers, reduce incentives for new construction, and could even burden non-wealthy residents who maintain a second residence for reasons such as work or health care. At the same time, rising demand for attainable housing options continues to drive expansion strategies across key US markets, reinforcing how supply constraints extend beyond vacant units alone.

Early Evidence Mixed

Data from overseas suggests some positive outcomes. Vancouver introduced a vacant-home tax and reduced empty units significantly. Vacant homes fell from over 2,500 in 2017 to under 1,000 in 2024. Similarly, France applied an empty-homes tax and saw vacancy rates drop by about 13%. These results show targeted policies can influence housing availability.

However, some experts view these measures as a third-tier solution. They still acknowledge modest gains in rental supply and added city revenue. Even so, the overall impact remains limited. These gains fall short when compared to total housing supply and city budgets. New York expects about $500M annually, against a $120B budget.

What’s Next

Second homes taxes are set to become more common in the US as city and state governments seek new revenue sources and ways to tackle housing shortages. Whether these measures deliver meaningful relief or cause unintended market disruptions will depend on implementation, enforcement, and broader housing strategies going forward. The debate around the regulation of second homes taxes is expected to intensify as more cities pursue similar initiatives.