Trump Eyes Federal Challenge to NYC's Luxury Second-Home Tax, Calls It a 'Dangerous Political Experiment'

Get Market Alerts

Weekly insights + SMS alerts

President Donald Trump is picking a new fight with New York City Mayor Zohran Mamdani, this time over the city's new tax on luxury second homes. On Tuesday, Trump said his administration is looking into whether the federal government can step in and block the so-called pied-à-terre tax, which he called a "dangerous political 'experiment'" that could hurt the city.

Trump Takes Aim at Mamdani's Luxury Home Tax

"I am looking to see if the Federal Government has any legal right to avert this disaster," Trump wrote on Truth Social. The tax, which was enacted through New York's state budget, is expected to bring in about $500 million a year.

The surcharge applies to non-primary residences. Through fiscal 2028, homes valued between $5 million and $15 million will face a 0.8% surcharge, with the rate climbing to 1.3% for properties above $25 million. Condos and co-ops face even higher temporary rates because city assessments tend to understate their market values.

Court Pause Adds to Rollout Woes

The rollout hasn't been smooth. A Staten Island judge temporarily blocked the tax after a group of homeowners sued. Mamdani, however, said City Hall would "vigorously defend" the policy. "We are confident in our position," he said Monday, arguing the tax would help fund "safer streets" and "stronger schools."

Mamdani has framed the tax as a fulfillment of his promise to "tax the rich." The city has already sent notices to about 17,000 homeowners and extended the appeals deadline to Sept. 18 after complaints that some primary residences may have been misidentified.

MarketDash reached out to the New York City Mayor's Office for comment on Trump's social media post but didn't get an immediate response.

The tax has also drawn fire from business heavyweights. Billionaires Ken Griffin, Bill Ackman, and Kevin O'Leary all criticized it before it passed. Griffin called Mamdani's campaign video outside his $238 million penthouse "creepy and weird," and Citadel warned it might reconsider a $6 billion Park Avenue project. Ackman argued the tax could lower property values and, in turn, reduce tax receipts. O'Leary, for his part, called the proposal "really stupid."

Tax Fight Deepens Trump-Mamdani Political Feud

This clash adds yet another layer to the already tense relationship between Trump and Mamdani. During the 2025 mayoral campaign, Trump threatened to cut federal funding to New York if Mamdani won, while Mamdani pledged to resist Trump's immigration crackdown. The two have also sparred over federal funding, immigration enforcement, and New York's sanctuary policies.

At a February White House meeting, Mamdani pressed Trump on ICE detentions and handed over the names of four pro-Palestinian students facing deportation attempts. The two also discussed housing affordability. Mamdani has additionally criticized Trump's policies on the Iran war.

With the tax now in legal limbo and Trump weighing federal intervention, the fight over New York's luxury homes is far from over.