This Penthouse Could Hold the Answer to NYC's Subway Woes

New York considers a pied-à-terre tax
By Newser Editors,  Newser Staff
Posted Mar 13, 2019 4:50 PM CDT

(Newser) Billionaire Ken Griffin made headlines in January when the Chicagoan purchased the penthouse at 220 Central Park South in New York City for $238 million, making it the priciest home ever sold in the US—by about $100 million. A rep for the Citadel hedge fund founder said he intended to use the 24,000-square-foot home when he's in New York to work at a new Citadel office there, and the decision "seemingly set the stage for New York's sudden embrace" of a first-in-America tax on uber-luxe second homes, writes the New York Times. The pied-à-terre tax, as it's known, is en force in cities like Paris, Singapore, and Vancouver; a proposal currently being considered by the State Legislature would apply a "sliding tax surcharge" to second homes in the city that are valued at more than $5 million.

The revenue could be substantial: Based on 2017 numbers, 5,400 NYC homes would be subject to the tax, and Gov. Cuomo projects some $9 billion in bonds could be raised off the revenue, money that could go toward fixing the city's crumbling subway system, bus network, and regional rail—a fix that Bloomberg reports is pegged at $40 billion. But Politico flags the possibility of "cruel irony," writing that the prime opportunity for a pied-à-terre tax may have come and gone as "foreign investment in real estate here may be slowing down as the growth in global wealth cools." Real estate professionals say that downturn is real and warn such a tax could exacerbate it. A former finance commissioner says the city's dated property tax system is the real problem: Griffin currently stands to pay $516,000 in taxes a year, but if his penthouse was taxed at the single-family rate applied in Queens or Staten Island, it would be 4 times that amount. (Read more New York City stories.)

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