Kathy Hochul’s pied-à-terre tax spells challenge for co-ops

The co-chair of Herrick's Condominium and Cooperative Practice, Andrew Freedland, was quoted in an article by The Real Deal discussing how New York lawmakers approved Gov. Kathy Hochul’s controversial annual pied-à-terre tax on second homes in New York City valued at $5 million or more. The new tax creates a significant challenge for co-op boards, which will be responsible for collecting the surcharge from shareholders who use their apartments as second homes. That process will likely create legal headaches for the board, especially if pied-à-terre owners don’t pay their taxes in a timely fashion. If the board falls behind on its taxes, the city could place a lien on the entire building.

These complications could push co-ops to stop allowing shareholders to use or purchase apartments as second homes. While some already prohibit the practice, those buildings are in the minority of co-ops, said Andrew. He noted that the tax will create additional strife for co-op boards and the city, which will have to lay significant groundwork in order to apply the tax to relevant co-op owners.

"The co-op board doesn’t have the same tools as the city and the state to enforce taxes," Andrew said. He added that for the city, "it’s going to be a lot of work for them to get from point A to point B."

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