Mayor Zohran Mamdani's new tax on high-end second homes took effect July 1, and real estate brokers say it is already freezing buyers, inflating the luxury rental market, and pushing wealthy purchasers out of New York City altogether.
A month into the policy, the picture emerging from Manhattan's brokerage offices is blunt: international buyers are walking away from signed deals, sellers are listing properties they once planned to keep, and six-figure-a-month rental units are filling up with people who would have bought if the city had not added a new annual bill on top of already steep property taxes. The tax applies to second homes valued above $5 million, starting at a 4-percent annual rate and climbing to 6.5 percent under the first phase of the plan. A second phase, set for the 2028, 29 tax year, will change how the levy is calculated, details the city has not yet made public.
The policy's supporters frame it as a way to make billionaire absentee owners pay their share. But the brokers who move these properties every day describe something different: a market recoiling from a tax that adds hundreds of thousands of dollars in annual carrying costs to units that already generate enormous revenue for the city treasury.
Douglas Wagner, director of brokerage services at BOND New York, described one deal that collapsed almost immediately. A buyer from Madrid who also owns a home in Miami had been watching a unit at the Giorgio Armani Residences at 760 Madison Avenue, a new luxury building on the Upper East Side. The unit, No. 6B, carried an asking price of $8.9 million. Common charges and taxes already ran about $120,000 a year. Wagner estimated the pied-à-terre surcharge would add another $40,000 to $50,000 annually.
Wagner told the New York Post the buyer had watched the unit while it was still under construction and got serious when the price dropped. But as July 1 approached, his team informed her about the new tax.
"She had been watching a particular unit pre-market while it was still under construction, and when the price came down, she got serious. But we were coming up on July 1, and we told her about the pied-à-terre tax and what to expect. Around July 11th, she let us know that she was suspending her search because of the extra expense."
The unit remains unsold. Wagner did not say whether other prospects have materialized.
That pattern, interest, sticker shock, withdrawal, is repeating across Manhattan's high-end condo market. Compass agent Pamela D'Arc, who frequently sells luxury residences to tech and Hollywood executives from California, described buyers recalculating in real time.
"The numbers are so beyond what people are interested in spending every year that many people are rethinking."
D'Arc said sellers are also reacting. People who own second homes they rarely use are putting them on the market rather than absorb the new cost. Buyers, meanwhile, are adjusting downward.
"People are listing things for sale that they don't use a lot. Buyers are sitting on the sidelines. I have clients that have changed their price point to be just under $5 million."
The damage is concentrated in exactly the buildings that define Manhattan's global brand. At 432 Park Avenue, the supertall tower on Billionaires Row where Jennifer Lopez, Alex Rodriguez, and Saudi billionaire Fawaz Al Hokair have all owned units, at least one-third of the residences will be subject to the tax, the Wall Street Journal reported. That puts affected owners on the hook for roughly $3 million in new annual tax on top of the $3.6 million in property taxes they already pay. Many of those units are held through limited liability companies, and the city has not clarified how "second home" status will be determined for LLC-owned properties.
At 220 Central Park South, billionaire Ken Griffin, who paid $238 million for his unit, described as practically unused, could face an additional $1 million a year in pied-à-terre tax, on top of the $837,000 he already pays in property taxes. Griffin has publicly threatened to pull his financial operations from New York City and has been described as scaling back NYC jobs in response.
The numbers explain why the reaction has been swift. A buyer sitting on a $10 million second home now faces an annual tax bill that starts at $400,000 and could rise to $650,000, before property taxes, common charges, or insurance. For a unit like Griffin's, the combined annual carrying cost approaches $2 million. That is not a rounding error even for the ultra-wealthy. It is a structural disincentive to own property in the city.
Not every corner of the market is suffering. The tax has created a clear dividing line at $5 million, and properties below that threshold are seeing increased interest from buyers who would otherwise have spent more.
D'Arc pointed to the co-op market, which has long traded at a steep discount to condos. A Brown Harris Stevens study found that the average Manhattan condo resale with three or more bedrooms closed above $6.7 million in the first quarter of the year. The same category of co-op sold for $3.7 million, a gap of $3 million that now carries an additional incentive.
"The co-op market is the value buy, as it has been for years. Now, people who had been shopping for condos are looking at co-ops that are pied-à-terre friendly."
The phrase "pied-à-terre friendly" is broker shorthand for co-ops that allow non-primary-residence ownership, a policy that varies building by building and is not a formal city designation.
At the Mandarin Oriental Residences on Fifth Avenue, a 65-unit building completed in 2023, the tax has had an almost counterintuitive effect. The building recorded zero deals in June 2026. Since the tax took effect, broker Peter Zaitzeff of Serhant said two units have sold, 22A, asking $3.95 million, and 19A, asking $4.995 million. Both fall just under the $5 million threshold.
Zaitzeff was candid about the dynamic, noting that 95 percent of the building's remaining inventory is priced below $5 million.
"Its actually, sort of, I don't know... benefited us. We are doing more sales now than we did prior."
One Wall Street, the ambitious 566-unit residential conversion of a landmark Art Deco skyscraper developed by Harry Macklowe, is similarly positioned. Anna Zarro, president of One Wall Street Sales, said the building conducted a study of its existing residents and found almost none would be affected by the tax. With 32 current listings and virtually all units priced below the threshold, the building is marketing itself as a haven for multi-home buyers. Mamdani's broader policy agenda, from signaling openness to reparations to this tax, has consistently targeted wealth. One Wall Street's pitch is essentially that its price point lets buyers sidestep the consequences.
"We're extremely well-suited for those that have multiple homes, with a wide range of residences under the $5 million threshold."
The most visible market shift may be in rentals. Zarro described three categories of buyer response: some press pause, some wait to see how the tax plays out, and some simply rent instead of buying.
"There are some people who just press pause. There are some people who are waiting to see how things play out. And there are some people who are renting very, very high-ticket condos. They're doing the math on various taxes, including the pied-à-terre tax, and they're saying, 'Fine, I'll rent.'"
Caroline Bass of Corcoran confirmed the trend. She reported a surge in activity in the high-end rental market, people who might have purchased a condo now signing leases on six-figure-a-month apartments instead.
"I'm seeing a ton of activity in the high-end rental market. These people, maybe they would have bought. Now, they're deciding to rent a six-figure apartment."
Zaitzeff cited a specific example: the penthouse at the Bellemont at 1165 Madison Avenue on the Upper East Side rented for $85,000 a month at the start of July. Buildings like 30 Park Place, 56 Leonard, and 111 Murray Street in Tribeca are also attracting wealthy renters at rates above $20,000 a month. The math is straightforward. A buyer who would have paid $8 million for a condo and then faced $40,000 to $50,000 a year in pied-à-terre tax, on top of six-figure common charges and property taxes, can rent a comparable unit for a fraction of the total annual cost, with none of the long-term exposure.
The city collects nothing from those rental transactions. No transfer tax. No property tax from a new owner. No mortgage recording tax. The revenue the pied-à-terre tax was supposed to generate is being partially offset by deals that never close.
Jason Haber, a Compass agent and co-founder of the American Real Estate Association, made the sharpest policy argument against the levy. His point was not that billionaires deserve sympathy. It was that the city needs transaction volume to fund itself, and this tax suppresses exactly that.
"If anything, given the dire strait of the city budget, we should be encouraging more transactions, not less, because the more velocity we have in the market, the more real property tax gets generated, and that goes right into the city's general fund. Instead this tax does just the opposite."
Haber's argument cuts to the core contradiction. A city that is struggling financially enacted a tax that discourages the very transactions that fill its coffers. Every buyer who walks away, rents instead, or drops below the $5 million threshold represents lost transfer taxes, lost mortgage recording fees, and, in many cases, a unit that stays off the property tax rolls at its full potential value. The mayor who has claimed credit for policies he did not pass now owns a tax whose early returns suggest it may cost the city more than it collects.
The administration has not publicly responded to the broker reports or offered its own data on revenue collected during the tax's first month. No official city statement appears in the available reporting. That silence is itself notable, a month into a signature policy, the mayor's office has let the market's verdict go unanswered.
Meanwhile, the broader pattern of Mamdani's tenure continues to generate friction with New Yorkers across the political spectrum. From clashes with NYPD unions to public confrontations with 9/11 families, the mayor has built a record of ideological ambition that frequently collides with the practical interests of the people he governs.
Phase 2 of the pied-à-terre tax, set for the 2028, 29 tax year, will change the calculation method, though the city has not disclosed how. If the first month is any guide, that next phase will land on a market that has already reorganized itself to avoid the tax's reach, leaving the city chasing revenue from a shrinking pool of owners who did not get out in time.
Governments that punish ownership do not create fairness. They create renters, empty units, and smaller tax rolls, and the people who pay for that are not billionaires. They are the city workers whose services depend on the revenue that just walked out the door.
