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Economy May 27, 2026 12:42 PM

New York unveils surcharge on high-end second homes to raise $500 million

State proposal targets roughly 10,000 non-primary residences in NYC as part of a delayed $268 billion budget

By Maya Rios

Lawmakers in New York have put forward a surcharge on expensive second homes in New York City designed to raise $500 million toward a postponed $268 billion state budget. If the measure wins approval in a Wednesday vote, it would begin on July 1, with property owners notified by August 30 and allowed to appeal. The proposal applies to an estimated 10,000 single-family houses, co-ops and condominiums, exempts primary residences and certain occupied properties, and phases in a two-step tax schedule that consolidates under a unified rate structure from July 1, 2028. A previously discussed tax on all-cash purchases is not included.

New York unveils surcharge on high-end second homes to raise $500 million

Key Points

  • Proposal seeks $500 million in revenue as part of the delayed $268 billion state budget.
  • Estimated impact on approximately 10,000 single-family homes, co-ops and condos in New York City.
  • Two-phase tax schedule: initial differentiated rates for single-family homes and for co-ops/condos, then a unified rate structure for properties $5 million and above starting July 1, 2028.

New York state lawmakers have advanced a plan to levy a surcharge on high-value second homes located in New York City with the stated aim of generating $500 million for the state budget. The surcharge is part of the state's postponed $268 billion fiscal plan and would take effect if approved in a scheduled vote on Wednesday.

Under the proposal, the new charge would begin on July 1. Property owners who are subject to the surcharge would receive formal notices by August 30 and would have an opportunity to challenge the assessment through an appeal process.

Officials in the governor's office estimate the measure would reach roughly 10,000 properties across the city, including single-family residences, cooperative apartments and condominiums. The plan explicitly exempts properties that serve as a primary residence, those that are occupied by immediate family members, and those that are leased as rentals.

The levy is structured to roll out in two phases. For the initial two years after enactment, single-family homes with valuations of $5 million or more would be subject to rates ranging from 0.8% to 1.3%. During that same early period, co-ops and condominiums valued at $1 million or higher would face steeper rates, between 4% and 6.5%.

Beginning July 1, 2028, the proposal moves to a single, uniform rate schedule that applies to all property types with assessed values of $5 million or more. Under that longer-term structure, properties valued between $5 million and $15 million would be taxed at 0.8%. Units or homes valued between $15 million and $25 million would be assessed at 1.05%, and properties worth $25 million or more would face a 1.3% rate.

The current text of the plan removes a previously discussed element that would have targeted all-cash property purchases. That option is not included in the proposal now before legislators.

This measure is intended to be revenue-generating within the confines of the state's delayed budget process. The proposal sets specific timelines and valuation bands, outlines notifications and appeals for affected owners, and establishes clear exemptions for primary residences, family-occupied units and rental properties.

Risks

  • Approval uncertainty - the surcharge must pass a vote on Wednesday to take effect, creating timing risk for projected revenue (impacts public finances and municipal budgeting).
  • Appeals and valuation disputes - affected property owners will have the opportunity to appeal notices received by August 30, which could delay or reduce collections (impacts property owners and municipal tax administration).
  • Policy scope limitations - exclusions for primary residences, family-occupied units and rentals, and the omission of an all-cash purchase tax, constrain the taxable base and therefore the revenue outcome (impacts real estate and fiscal projections).

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