Gov. Kathy Hochul and state lawmakers are poised to tax certain New York City homes that are purchased with cash as part of the state’s effort to help the city plug its budget gap, according to a top lawmaker.
State Assembly Speaker Carl Heastie on Thursday confirmed the tax is part of the $8 billion aid package announced earlier this week by Gov. Kathy Hochul, which New York City Mayor Zohran Mamdani relied on to balance his proposed city budget earlier this week.
“ The non-mortgage … tax, that was part of the plan to help close the city's deficit,” Heastie told reporters at the state Capitol on Thursday.
The tax is expected to be part of a final state budget agreement, which is now more than six weeks late. It’s separate from her proposed tax on expensive second homes in New York City, which the governor finally detailed for the Legislature on Thursday.
Despite Hochul announcing a “general agreement” on a $268 billion budget last week, she and legislative leaders continue to negotiate that and other major portions of the spending plan.
The anticipated 1% tax on cash purchases will apply to real estate that sells for $1 million or more in the five boroughs, according to Heastie spokesperson Mike Whyland. It’s designed to be similar to the city’s existing tax on real-estate purchases with a mortgage, known as the mortgage-recording tax.
It’s estimated to raise $160 million for the city, according to Whyland. Lawmakers are still discussing whether the tax will apply statewide, the spokesperson said.
Cash sales have been rising in New York City. For the first half of 2025, there were nearly 11,000 homes bought for cash in New York City, according to nonprofit Center for NYC Neighborhoods. The median sales price for cash purchases was $939,000.
Two other people with knowledge of the negotiations confirmed the details of the tax, a version of which Mamdani’s office presented to Hochul and state lawmakers earlier this year as an option to raise money for New York City. Bloomberg News first reported details of the tax on Thursday.
Hochul, a Democrat, had faced pressure from Mamdani and left-leaning lawmakers and activists to increase taxes on the wealthy to help fund the mayor’s agenda and close an estimated $5.4 billion city budget deficit.
The governor resisted calls to hike state or city taxes on income and corporations. She and legislative leaders have agreed, however, to implement a so-called pied-à-terre tax on unoccupied second homes in New York City worth $5 million or more, which Hochul’s office estimates will bring in $500 million annually for the city.
But figuring out how to implement the second-home tax has proven difficult, in part because homes in New York City — particularly condos and co-ops — are assessed far below what they could fetch on the open market.
On Thursday, Hochul unveiled her detailed pied-à-terre proposal for the first time.
Under that plan, the tax surcharge would apply to one- to three-family homes with a market value of at least $5 million as assessed by the city, according to the governor’s office. That tax would be between 0.8% and 1.05%, depending on the home's value.
For condos and co-ops, which are assessed lower than standalone homes, the pied-à-terre tax would kick in for units with an assessed market value of at least $1 million for the first two years, according to the governor’s office. It would be between 4% and 6.5%.
The tax surcharge for condos and co-ops is higher because they’re often assessed at values that are a small percentage of what they would actually get at market, according to the governor’s office.
Over the next two years, the city would be required to come up with a new method for valuing condos and co-ops that estimates what they would get on the open market, according to the governor’s proposal. After that, the pied-à-terre surcharge would apply at the same rate as standalone homes.
Homeowners would pay the proposed tax annually on top of existing property taxes.
As crafted, Hochul’s proposed pied-à-terre surcharge would appear to apply to President Donald Trump’s penthouse in the tower that bears his name in Midtown, assuming he has not rented it out or a family member does not claim it as their primary residence.
The Trump penthouse has a city-assessed “market value” of $6 million, well below what it would fetch if sold.
Spokespeople for Heastie and Senate Majority Leader Andrea Stewart-Cousins said their respective houses were reviewing the governor’s proposal Thursday afternoon. The proposed pied-à-terre tax would remain in place for five years, after which lawmakers and the governor would face a decision whether to renew it, according to the governor’s office.
The New York Times first reported details of Hochul’s proposal, which came a month after the governor first announced her support for the tax.
Both the pied-à-terre and cash-sales tax proposals have drawn the ire of the real-estate industry, which says they could put a damper on sales in the five-boroughs.
James Whalen, president of the Real Estate Board of New York, said New York residents are “already the most heavily taxed residents in the country” and that the city’s budget issues “will not be solved by more taxes.”
“On the back of $500 million in a new second-home tax, putting even more costs on home buyers and sellers will further discourage transactions and threaten existing revenue collected by the state, city and MTA,” Whalen said in a statement.
The state budget was due before the start of the state’s fiscal year on April 1.
Heastie told reporters Thursday that he’s hoping to begin voting on the estimated $268 billion spending plan by the end of next week.
Includes reporting by David Brand.
