WEEHAWKEN, NJ – OCTOBER 5: The sun rises behind buildings along Billionaire’s Row in New York City on October 5, 2025, as seen from Weehawken, New Jersey. (Photo by Gary Hershorn/Getty Images)Gary Hershorn | Corbis News | Getty ImagesA version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.New York’s proposed tax on second homes worth more than $5 million is likely to spark costly legal battles over how to value the city’s most expensive real estate, according to appraisers and attorneys.The city’s so-called “pied-à-terre” tax, announced last week by New York Gov. Kathy Hochul and New York City Mayor Zohran Mamdani, would impose an annual surtax on non-primary residential real estate worth more than $5 million. The governor and mayor said the levy will raise about $500 million a year to help pay off the city’s budget deficit.Officials haven’t released any details, including the tax rates or timing. Yet real estate appraisers and attorneys said the tax sets the stage for a massive legal fight over how to value high-end real estate in one of the most expensive markets in the world. Because New York’s antiquated property tax system dramatically undervalues co-ops and condos, experts said the city will have to come up with a new system for valuing high-end second homes.Among the questions: Will it be up to the property owner, or the city, to set the taxable value? Will pied-à-terre owners have to hire appraisers to value their apartments every year? How will the city handle the barrage of legal challenges over values?”The administrative costs haven’t been thought through,” said Jonathan Miller, CEO of Miller Samuel, the appraisal and research company. “This tax could give birth to a whole new cottage industry, where I get to do a lot of appraisals.”The tax is expected to be part of the state’s annual budget and still has to be approved by the state legislature. It faces strong opposition from …
