New York City lawmakers are considering a major new real estate tax proposal that could impact wealthy homebuyers and investors across the state. The proposal, titled “New York Plans Tax on Homes Over $1 Million Purchased With Cash,” is currently being discussed as part of ongoing state budget negotiations.
According to sources familiar with the matter, the proposed tax would apply to residential properties in New York City purchased entirely with cash for $1 million or more. Lawmakers are also considering expanding the measure statewide, meaning luxury homes bought in suburban and upstate regions without mortgage financing could also fall under the new tax rules.
The proposal is part of a broader effort by city and state officials to address affordability concerns, reduce inequality in the housing market, and generate additional revenue to close budget deficits. Supporters argue that high-value all-cash transactions are often concentrated among wealthy buyers and investors, making them an appropriate target for additional taxation.
Earlier this year, New York City Mayor Zohran Mamdani introduced a controversial proposal to raise property taxes by 9.5%. The mayor said the increase could generate nearly $3.5 billion in revenue to support city services and reduce financial pressure on the municipal budget. However, the proposal quickly faced backlash from homeowners, landlords, and leaders in the real estate sector.
After criticism from both residents and industry groups, Mayor Mamdani decided to withdraw the broader property tax increase proposal this week. Despite that decision, the administration continues to push for alternative tax measures, including the so-called pied-à-terre tax.
The pied-à-terre tax would primarily target wealthy individuals who own second or vacation homes in New York while maintaining their official residence elsewhere. City officials estimate the measure could raise at least $500 million annually. The revenue would help reduce what Mayor Mamdani has described as a nearly $12 billion budget gap facing the city.
New York Governor Kathy Hochul has reportedly shown more openness toward the pied-à-terre tax than other wealth-focused tax proposals. Analysts believe the governor sees the measure as politically easier to support because it affects non-primary residences rather than permanent homeowners living in New York full-time.
The debate surrounding luxury property taxes has also attracted attention from major investors and corporations. Billionaire investor Ken Griffin and his hedge fund company Citadel recently suggested they could reconsider a planned $6 billion expansion project in Midtown Manhattan after the tax discussions intensified.
Real estate professionals warn that additional taxes on high-end cash purchases could slow activity in New York’s luxury housing market. Some experts believe wealthy buyers may shift investments to other states with lower tax burdens, while others argue the impact would remain limited because demand for premium New York properties remains strong.
Housing advocates, meanwhile, support the proposal and say it could help make the city’s housing market fairer. They argue that luxury cash transactions often contribute to rising property prices and reduced affordability for middle-class residents.
The final decision on the proposed tax will depend on negotiations between lawmakers, the governor’s office, and city officials in the coming months. If approved, the measure could become one of the most significant real estate tax changes in New York in recent years.