Billionaire investor Bill Ackman is pushing back on New York City’s pied-à-terre tax, arguing the levy will backfire by shrinking property values and tax revenue rather than boosting city coffers.
Cap Rate Math Points to Steep Value Losses
In an X post on Saturday, the Pershing Square Capital Management CEO argued that a taxed home’s value will decline in proportion to the capitalized cost of the new levy.
Ackman noted the 5% surcharge on assessed property value equals roughly 0.3% to 0.75% of a home’s market value. Based on a 4% capitalization rate, he estimated that property values across the city, along with related tax revenue, could fall by 7.5% to 18.75%.
The @NYCMayor Mamdani pied a terre tax (the PAT tax) will likely reduce overall tax revenues for NY and that’s before considering the capital flight it will cause.
— Bill Ackman (@BillAckman) August 1, 2026
When a NYC home is burdened with an additional annual tax, the home value will decline by the capitalized value of…
Ackman has been a vocal critic of the proposal from the beginning, warning that the policy could create unintended consequences for New York’s housing market and long-term tax base.
$500 Million Revenue Target
Mayor Zohran Mamdani introduced the tax in April, targeting secondary homes worth over $5 million owned by non-residents. Hedge fund manager Ken Griffin‘s $238 million Central Park penthouse became the policy’s public face, with Citadel reportedly threatening to pause its $6 billion Park Avenue redevelopment in response.
According to Gov. Kathy Hochul, the levy would hit roughly 13,000 properties, or 0.4% of city housing and could raise about $500 million annually.
Ackman also warned the policy could encourage capital flight among wealthy residents and reduce demand for New York housing. Critics, including Nassau County Executive Bruce Blakeman, have similarly argued that higher taxes could pressure households and businesses.
The proposal has also faced privacy concerns over a city property database listing roughly 960,000 properties, though officials say only about 31,000 properties meet the valuation threshold for the tax.
Real estate taxes generated $39.6 billion in 2025, nearly half of the city’s local tax revenue, according to the Real Estate Board of New York report. The tax is projected to raise about $500 million annually, with the exemption-application deadline extended to Sep. 18.
The tax aims to close budget gaps, support essential public services, and ensure that wealthy non-resident owners of luxury second homes contribute their fair share to the city.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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