New York City mayor Zohran Mamdani has announced a historic new tax on owners of luxury second homes which are worth $5m or more, in a bid to raise $500m for the city.

The ‘pied-à-terre tax’ will apply to people who do not live full time in the city but reap the rewards of investing in the New York real estate market.

Mamdani called the new tax “specifically designed for the richest of the rich” and said it was aimed at tackling a “fundamentally unfair system that hurts working New Yorkers”, in a video post on social media.

The new tax was formally proposed by NY state governor Kathy Hochul, who added on X: “New Yorkers show up for this city every day. Some of the wealthiest property owners and foreign oligarchs don’t. It’s time they start contributing like everyone else.”

According to the New York Times, Hochul has been resistant to taxing large corporations and the city’s wealthiest residents. However, she was more open to taxing luxury second-homeowners who do not pay state or city income taxes because their primary residences are outside New York.

The tax will contribute towards combatting New York City’s fiscal deficit, which is estimated to stand at $5.4bn through the next fiscal year.

Previous attempts to introduce a second-homes tax were quashed by powerful real estate developers, including as recently as 2019.

Sophia Sheera is a journalist in Novara Media’s social media team.

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