New York City’s attempt to identify properties subject to its new pied-à-terre tax has triggered a lawsuit and temporary court block, with homeowners arguing that the city is incorrectly targeting properties held through trusts and limited liability companies.
The Wall Street Journal reported Monday that several homeowners who received tax notices share a common feature: Their homes are held through trusts. A trust or LLC is simply a legal structure that can hold a property instead of the individual owning it directly. The arrangement can be used for estate planning, inheritance or privacy, but it can also make it harder for the city to determine who actually lives in the property.
Why Trusts and LLCs Are Under Scrutiny
The tax applies to non-primary homes worth $5 million or more and certain co-ops and condos worth $1 million or more. Trust- and LLC-owned properties may qualify for exemptions. The city sent 17,000 notices, with about 3,800 exemption applications started within a week.
"Part of the point of this outreach from the Department of Finance is to ascertain whether or not that reflects a primary residence or not," Mayor Zohran Mamdani said at a news conference last month, referring to homes owned by trusts and LLCs. "One of the reasons that this is being done now is to ensure that New Yorkers have requisite time before the implementation of the surcharge."
