Don't Let Luxury Property Surcharges
Erode Your Hard-Earned Wealth

Neutralize The New Secondary Property Surcharges

New progressive non-primary residence taxes are targeting high-value real estate and its owners. Learn how the ultra-rich turn penalizing property exposure into tax-advantaged liquidity. From the Northeast coastal enclaves to West Coast tech metros and mountain retreats—non-primary residence real estate is under policy attack. We protect your multi-market family wealth.

YES Is Your Economic Safe Harbor

What High-Net-Worth Property Owners Need to Know Starting With The New York Tax Landscape:

Who is Zohran Mamdani?

Zohran Mamdani took office as Mayor of New York City in January 2026 after a historic campaign built on a platform of taxing high earners and large property holdings to fund expanded city services. A member of the Democratic Socialists of America who has consistently self-identified as a democratic socialist, Mamdani has made clear that redistributing wealth from concentrated property and high incomes toward public spending is not a side effect of his policies — it is the explicit goal.

Since taking office, his administration has pursued a series of tax proposals aimed squarely at wealth concentrated in real estate and high incomes:

The pied-à-terre tax: Enacted in 2026, this tax applies a tiered annual surcharge on second homes and investment properties valued above $1 million — 4% on properties between $1–3 million, 5.25% between $3–5 million, and 6.5% above $5 million. It was designed specifically to reach non-resident owners of luxury Manhattan real estate who otherwise contribute little to the city's income tax base.

Estate tax reform: A proposal to cut New York's estate tax exemption from $7.35 million to $750,000 while raising the top rate from 16% to 50% — a structural shift that would bring far more estates, including real-estate-heavy ones, into the state's taxing reach.

Income surcharges: A proposed 2% surcharge on income above $1 million, alongside corporate tax increases, framed as asking "the wealthiest individuals and most profitable corporations to contribute a little more."

A broader property tax push: An initial proposal for a 9.5% citywide property tax increase was ultimately scaled back after political pushback, but it signaled the administration's willingness to use property valuation as a primary lever for revenue.

Yet some can pay little to no tax due to 100% tax offsets.

It's no secret; in fact, it's well documented. While some of the wealthiest can pay little to no tax, many still miss the boat — so to speak.

However, it would be a reasonable mistake to assume that the wealthiest with the best advisors always pay the lowest taxes.

They don't.

A prime example is the taxpayer with $45,000,000 AGI who overpaid his taxes by some $11,800,000 in federal taxes and $700,000 in state taxes — despite having access to some of the best advisors money can buy.

That's not a story about bad advice. It's a story about coverage: past a certain point of complexity, no single advisor's scope can catch everything. Not the least of which:

the tax code changes rapidly,
nobody knows everything, and
the more sophisticated one's tax and business affairs, the greater the chance something slips through the cracks.

According to the Congressional Research Service:

"Of the $1.6 trillion in taxable income reported on returns subject to the top marginal income tax rate of 37% in 2018, $780 billion was taxed at the 37% rate. Out of all taxable income ($9.0 trillion), 8.7% was taxed at the top tax rate of 37%.

Another way to examine the amount of income subject to the top marginal tax rate is to look at tax rates imposed on the income of high-income taxpayers.

In 2018, $2.3 trillion in taxable income was reported on returns with AGI of $500,000 or more ($1.6 trillion was reported on returns with AGI of $1 million or more). Of total taxable income reported on returns with AGI of $500,000 or more, 34.2% was subject to the 37% top marginal income tax rate (45.4% for returns with $1 million or more in AGI)."

This is the macro version of what we see case by case: real money left on the table, not from bad advice, but from the limits of any one advisor's bandwidth against a code this complex. That's the specific gap we work in — alongside your CPA or attorney, adding an economist's read of the aggregate patterns to find what individual-return review alone tends to miss.

Is it possible some tax benefits may be overlooked or falling between the cracks that could reduce your taxes to less than 5% and totally offset property taxes?

Why This Matters Beyond New York

Strip away the language of "fairness" and "contribution," and what's happening is straightforward: a government is transferring wealth from a targeted class of property owners to fund its own spending priorities — and that class largely has no vote in the matter. Non-resident and out-of-state owners hold significant local assets but cast no ballots in the jurisdictions now taxing them. There's no negotiation, no consent, and no exit short of divesting the asset. It is redistribution enforced by statute rather than agreement — legal, but not something the people paying for it ever chose.

This is not unique to New York. A growing number of state and local governments — and jurisdictions internationally — are converging on the same playbook: use high-value real estate, second homes, and pieds-à-terre as a proxy for wealth that doesn't otherwise show up in local income tax filings, and target owners who have assets on the ground but no political voice at the ballot box. It is, in effect, taxation without representation dressed up as tax equity.

For property owners, family offices, and advisors managing real estate holdings in these markets, the practical question isn't whether this trend is justified — it's how to respond to it. Understanding how these taxes are structured, and where legitimate planning and asset-protection strategies exist, is now a core part of preserving what you've built.

At the time of this writing, no other state or major city has enacted New York's specific mechanism: an ongoing annual surcharge on non-primary residences, scaled to assessed value, applied regardless of whether the property is occupied. What follows below are related but distinct tools other jurisdictions have advanced instead — vacancy taxes tied to days unoccupied, one-time transfer or "mansion" taxes triggered at sale, and broad income or wealth surcharges untethered to any specific property. Each hits a different point in an owner's holding period, and none currently replicates New York's ongoing, value-based, occupancy-agnostic model.

That distinction is worth watching rather than relying on. As the examples below show, vacancy taxes, transfer taxes, and value-based surcharges are converging mechanisms aimed at the same target — under-taxed, high-value, non-primary real estate — and the legislative gap between them is narrowing, not widening. Utah's occupancy-linked exemption denial and San Diego's per-day vacancy penalty are already functional cousins of New York's approach; it would take a modest statutory tweak, not a new policy framework, for either to converge on it directly. Given how quickly this category of policy has moved over the past two years, treating today's landscape as fixed would be a mistake.

Broader "Tax the Rich" Efforts

Income and Wealth Focus: States such as California, New Jersey, Maryland, and Minnesota have focused on high-income surcharges and million-dollar income brackets rather than secondary property real estate mechanics.
Absence of Direct Copycat Bills: Legislative bodies outside of New York have not introduced parallel property-value surcharges for non-primary residences valued over $5 million.

No other states are actively considering a copycat "pied-à-terre" tax on luxury second homes. While New York Governor Kathy Hochul officially signed the Fiscal Year 2027 Budget Bill creating this exact surcharge for multimillion-dollar non-primary residences in New York City, other states are opting for different legislative mechanisms to target wealthy residents.

What Other States Are Doing Instead

Progressive-led states are heavily leaning into millionaire income brackets and net-worth wealth taxes rather than tracking property occupancy:

Washington State: Passed a landmark 9.9% income tax on households making over $1 million.
California: Advancing a 2026 ballot measure to implement a 5% one-time tax on billionaires.
Colorado: Gathering voter signatures to introduce graduated income tax brackets for individuals and corporations earning over $500,000.
Maine and Massachusetts: Successfully enacted or strengthened millionaire surcharges on high earners.

Existing "Mansion Taxes" (The Real Estate Alternative)

Rather than an ongoing annual property surcharge based on whether the owner lives there, other states rely on one-time real estate transfer taxes when high-value homes are sold. States like Rhode Island, New Jersey, and Connecticut utilize these multi-tiered luxury transfer taxes, but they do not specifically target "empty" second homes the way New York's new policy does.

If you would like, I can break down how Washington's new millionaire tax compares to New York's revenue strategy or outline the current legal challenges facing these high-net-worth tax laws.

The Hawaiian example.

Hawaii is aggressively pursuing its own versions of taxing wealthy real estate owners, though its approach relies on county-level vacancy surcharges and steep real estate transaction fees rather than a state-level pied-à-terre copycat law. Because the Hawaii State Constitution grants counties the exclusive power to levy property taxes, local islands have independently targeted wealthy, non-resident property owners.

1. The "Empty Homes Tax" Surcharge

Instead of a statewide tax, individual islands are shifting the tax burden to wealthy, out-of-state investors:

Honolulu / Oʻahu (Bill 46): The City Council is actively advancing a major "Empty Homes Tax". If passed, it would apply a 1% to 3% property tax surcharge on residential units left vacant for more than six months out of the year to force owners to rent or sell them.
County-Level Multi-Tiered Rates: Counties like Maui and Hawaii Island (The Big Island) launched restructured property tax brackets. They explicitly lower property tax rates for primary homeowners while steeply escalating rates for multi-million dollar non-owner-occupied properties and luxury short-term rentals.

2. High-Value "Conveyance" Transaction Taxes

Instead of an ongoing annual pied-à-terre tax, Hawaii utilizes aggressive transaction penalties at the point of sale:

Non-Resident Penalties (HB 1213): Hawaii implemented a steep punitive conveyance tax rate targeting out-of-state real estate speculation. The law places a massive conveyance tax on luxury residential properties purchased by buyers who have not filed a Hawaii state income tax return in the previous four years.

3. Broader Wealth Taxes

Beyond real estate, Hawaii is aligned with other blue states in targeting high-net-worth individuals:

The New Millionaires Tax (SB 3125): Governor Josh Green signed a sweeping tax package that implements a new top income tax bracket of 13% for joint filers earning over $1 million and single filers earning over $500,000—making it one of the highest top marginal rates in the country.
Proposed Wealth Asset Tax: State lawmakers have repeatedly introduced bills (like SB 313) to create a 1% annual asset wealth tax explicitly targeting individuals with a net worth exceeding $20 million.

A growing number of U.S. cities and states are actively advancing or considering "Empty Homes Taxes" (EHT) to combat severe housing shortages and generate municipal revenue. Unlike a broad "tax the rich" income surcharge, these specific policies penalize real estate owners who leave residential properties sitting vacant for the majority of the year.

Cities Advancing or Implementing Empty Home Taxes

San Diego, California (Measure A): San Diego put an aggressive "Empty Second Homes Tax" on the ballot. The measure targets properties left unoccupied for more than 182 days a year, penalizing out-of-state investors and corporate owners $8,000 in the first year and up to $10,000 the next.
San Francisco & Berkeley, California: Berkeley already enforces a residential vacancy tax. While San Francisco successfully passed a similar residential vacancy tax, it faced intense legal battles; however, city leaders are actively pushing to reinstate and adjust the tax.
South Lake Tahoe, California: This major resort community has faced fierce debates over a proposed vacation home vacancy tax targeting wealthy owners who leave properties empty for more than half the year.
Detroit, Michigan & Baltimore, Maryland: Shifting the focus from luxury vacation pads to urban blight, both cities' councils have commissioned frameworks and advanced proposals to levy steep property tax surcharges on abandoned, vacant, and derelict residential homes to force redevelopment or sales.
Steamboat Springs & Boulder, Colorado: These high-cost mountain and college towns have formally explored and debated luxury property vacancy taxes to incentivize wealthy owners to place their secondary homes on the long-term rental market.

States Taking the Reins

While most vacancy taxes are hyper-local "home-rule" initiatives, a few states are utilizing statewide tax codes to squeeze secondary, empty properties:

Washington State: Lawmakers have toyed with statewide vacancy frameworks, while cities like Seattle and Tacoma are exploring local commercial and residential vacancy surcharges to protect small businesses and boost housing density.

Utah: Rather than penalizing empty homes directly with a new tax, Utah uses an inverse structure: the state denies its 45% residential property tax exemption to any property that is not occupied as a primary residence for at least 183 consecutive days a year. Secondary, empty homes effectively pay double the property tax rate. [1]

Washington, D.C.: The District pioneered this concept by establishing separate tax classes. D.C. charges an aggressive $5.00 per $100 of assessed value on vacant real property—nearly six times higher than the $0.85 rate for occupied homes. Blighted, empty homes are taxed even higher at $10.00 per $100.

Globally, the push to tax empty homes is significantly more mature and aggressive than in the United States. Major cities and countries worldwide have enacted steep, multi-tiered vacancy taxes to stop real estate speculation and return properties to the local housing supply.

1. Canada (The Pioneer of Vacancy Taxes)

Canada features some of the most aggressive empty-home tax structures in the world, combining municipal, provincial, and federal penalties:

Vancouver, British Columbia: Vancouver’s Empty Homes Tax (EHT) forces all property owners to file an annual declaration. Leaving a home empty or under-utilized triggers a 3% tax on the property’s assessed value.
British Columbia (Provincial Level): On top of Vancouver's city tax, the province levies a separate Speculation and Vacancy Tax (SVT). This tax penalizes Canadian citizens 1% of the property's value and hits foreign owners with a 3% rate. Combined, a foreign owner leaving a $2 million Vancouver home empty faces a $120,000 annual tax bill.
Federal Level: Canada enforces the Underused Housing Tax (UHT), a nationwide 1% annual tax on the value of vacant or underused residential real estate owned by non-residents.

2. Australia (Targeting Unimproved Land)

Australia heavily targets empty dwellings, with the state of Victoria (which includes Melbourne) leading the charge:
The Vacant Residential Land Tax (VRLT): Victoria charges an annual tax on residential properties left unoccupied for more than six months out of the year.
The 2026 Expansion: Victoria implemented reforms to extend the vacancy tax to unimproved (raw) land. If a developer or investor buys residential land and leaves it sitting empty for years without building a home, the government levies the tax to force construction.

3. United Kingdom (Squeezing "Second Homes")

The UK uses its local municipal tax framework—Council Tax—to punish owners of both completely empty properties and periodically used holiday homes:

The Empty Homes Premium: In England, if a property is left entirely unoccupied and unfurnished, local councils can charge a 100% Council Tax premium after just one year of vacancy. This premium escalates based on time, reaching up to a 400% penalty tax for properties left empty for a decade.
The Second Home Council Tax Premium: Councils can also impose up to a 100% tax surcharge on furnished second homes that do not serve as a primary residence, forcing wealthy vacation-home owners to pay double their standard local tax rate.

4. Europe & Asia

Spain: Facing severe housing shortages in high-demand tourist zones, Spain advanced housing reforms to allow municipalities to substantially increase the tax burden on vacant properties owned by non-residents.
France: Imposes the Taxe sur les Logements Vacants (TLV), a steep tax targeting residential properties left vacant for over a year in urban areas with high rental demand.
South Korea: Levies a heavy comprehensive real estate holding tax targeting multi-home owners and vacant luxury properties to cool down the Seoul housing market.

Our Approach: A Federal Safe Harbor

Real estate is rarely just one line item in a portfolio — for most high-net-worth families and their advisors, it's a central, often illiquid, and increasingly exposed piece of the picture. As more cities, states and countries follow New York's lead in taxing property more aggressively, the calculus for holding real estate is shifting, and the owners bearing that cost have little say in the policies driving it.

We are not focusing here on litigating state or local tax policy — that's a different battle requiring different strategies, and a legislature's, not a taxpayer's, timeline but one that we are happy to pursue. Instead, here we focus on what's controllable: making sure our clients aren't leaving money on the table at the federal level.

The federal tax code contains substantial, legitimate opportunities for owners of real estate to reduce their overall tax burden — but capturing them requires expertise, precision, and a strategy built around each client's specific holdings, structure, and goals. There is no single playbook. Every portfolio, every entity structure, and every family's situation is different, and we tailor our approach accordingly.

The Asset Doesn't Matter — The Structure Does

From where we sit, a million-dollar condo and a million-dollar yacht present the same underlying problem. Both are large, illiquid, personal-use assets that a wealthy owner wants to actually use — not run as a profit-maximizing commercial operation. And most of our clients are candid about that: they're not trying to build a hospitality business out of a second home or a yacht. They want to use it, and they'd like it to stop being a pure cost center.

That's a legally meaningful distinction, and one worth being precise about. The IRS does not require a taxpayer to run an activity in the most aggressive, profit-maximizing way possible — the standard, under the relevant factors courts and the IRS actually apply, is genuine intent to make a profit, not the scale or intensity of that profit. An owner who uses a property or vessel extensively themselves, and generates real but modest income the rest of the time, can sit comfortably on the right side of that line — provided it's structured, documented, and operated correctly from the outset. That's a narrower and more precise standard than most advisors work with day to day, and it's exactly where the expertise gap sits.

We've built that expertise around yachts for years. Real estate — particularly non-primary, high-value property now caught in the surcharges described above — is the same problem in a different shape: an asset that doesn't have to choose between being personally enjoyed and being financially productive.

Our objective is simple: identify the federal tax savings available to you, so that the increasing weight of state and local real estate taxes doesn't have to come out of pocket. In many cases, those savings are enough to fully offset the new state and property tax burden — turning a policy headwind into a wash, or better.

To be direct about scope: this strategy is built for clients who carry meaningful federal income tax liability against which savings can be applied. If your structure already results in little or no federal income tax exposure, there is little for us to offset, and we'll tell you that plainly rather than manufacture a pitch. We'd rather qualify that up front than waste your time — or ours.

We're not asking anyone to take this on faith. We work alongside your existing CPA or tax attorney — not around them, and not in place of them. They know your full financial picture and hold the relationship; we bring a narrow, specific expertise in federal real estate tax strategy that complements that work rather than duplicating or second-guessing it. If you're a CPA or attorney evaluating this on behalf of a client, or an investor bringing it to your own advisor, the underlying mechanisms are standard federal tax provisions, applied with the specificity the situation demands — not a novel theory, not a workaround, and not something that depends on where the strategy happens to have been designed. We expect scrutiny, and the analysis holds up to it, including yours.

If real estate is a meaningful part of your holdings, the question isn't whether there are federal savings available to you. It's whether you're currently capturing them.