3 Things to Know If You're Buying Pied-a-Terre in NYC
I love working with second home buyers. A pied-a-terre in New York isn't a need. It's more of a dream or a goal, and they're very excited to be achieving it. Here are three things you should know if you're considering getting a little slice of the city for yourself:
Not all buildings are "pied-a-terre friendly." You'll have no issues with condos. As for co-ops, some allow pied-a-terres, some don't, and some "kind of" do.
If you'll want to have guests stay overnight, or to lend the apartment to friends and family, check the building's guest policy. Can someone stay if you're not there? Is there a time limit? Can guests bring their pets?
As I've mentioned in previous newsletters, you may have to pay the new Pied-a-Terre tax, but it affects far fewer homeowners than people think. If the current market value of your home is around $5M or more, you'll be paying the tax (which is currently being challenged in the courts). If it's below that threshold, it's highly unlikely.
You may have heard something different - that the tax affects homes worth $1M or more. That's misleading. The $1M home value that keeps being bandied about is the NYC Department of Finance’s "market value" which it uses to set tax rates. It is not the same as real word market value.
The DOF's value uses mass statistical modeling, legal caps on value increases, and artificial formulas (like valuing co-ops as rentals) to stabilize public revenue and phase in tax changes. Real market values are 4-6x higher. That's why in actuality, the tax only affects homes valued around $5M or more.
