- The pied-à-terre tax targets homes worth $5M or more whose owners live primarily outside New York City, and some of those owners are also losing a residency-based abatement.
- City audits have removed 10,000 apartments from the abatement program, and one high-profile owner faces a $101,000 annual surcharge after repaying nearly $78,000 in past abatements.
- The abatement relies on condo boards and managers certifying residency each year, a process one industry executive called flawed, while a court ruling on the tax rollout is on hold.
Some wealthy out-of-town owners face a double hit from a new pied-à-terre tax in New York City, according to the Wall Street Journal.
They are being charged the new surcharge while also losing an abatement meant for primary residences.
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A Surcharge Plus a Lost Perk
The tax targets homes worth $5M or more whose owners mainly live outside the city. It forms part of Mayor Zohran Mamdani’s pledge to raise taxes on the wealthy. To enforce the rules, the city has created new positions to identify second homes and handle appeals.
Meanwhile, the administration announced plans earlier this year to tighten checks on the primary-residence abatement. The city is taking this step as it addresses a budget shortfall. Those audits have already removed 10,000 apartments from the program, city officials told the Journal.
A High-Profile Example
Steve Witkoff, a Trump administration special envoy, lost a $24,000 annual abatement on a Manhattan apartment worth millions. His representatives said he did not know he was receiving it. After the Journal contacted him, a spokeswoman said he reimbursed the city about $78,000 for the years he was ineligible.
Records show Witkoff has claimed a Miami Beach estate as his primary home since 2019. His wife, however, lived in the Manhattan unit until 2023. Under the new surcharge, he will also owe $101,000 annually. That amount would more than double his property tax bill.
His lawyer said no one notified the couple of the change in primary residence. He called the continued abatement an unintended result of a gap in the process.
A System Built on Self-Reporting
Under the current system, owners tell their condo board or property manager that a unit serves as their primary home. The board or manager then confirms that status to the city each year.
However, property management executive Paul Brensilber of Jordan Cooper called the system flawed. He noted that owners often fail to return questionnaires.
The Journal reviewed New York and Florida records and found Florida residents who collected the abatement for years despite being ineligible. One was a real estate investment executive who received a $13,000 annual abatement. Another was a hedge fund chief whose abatement reduced his bill by $14,000. A spokesman for the hedge fund chief blamed a clerical error.
Additionally, the city mailed these owners’ tax bills to out-of-state addresses. Those addresses could have helped officials identify potential cases of ineligibility.
Why It Matters
High-end Manhattan condo owners now face greater scrutiny over where they live. Their property tax costs increasingly depend on proving their primary residence. Condo boards and property managers also face pressure to verify residency rather than rely on unanswered forms.
The financial impact can be significant. One owner’s bill would more than double, while others could face back payments.
What’s Next
Last month, a state judge ordered a redo of the tax rollout after homeowners sued. However, the city appealed, pausing the ruling. As a result, NYC can proceed while the case continues. In the meantime, expect the city to conduct more abatement audits.
