Mayor Zohran Mamdani’s proposal to raise property taxes by nearly 10% to help close New York’s $5 billion budget gap could land hardest on renters and middle-class homeowners — while leaving many of the city’s ultra-luxury condo and co-op owners comparatively shielded, Bloomberg reports.
The across-the-board hike, which would affect more than 3 million residential units, comes as Mamdani also pushes the alternative, which he touted in his campaign: a 2% increase in the city income tax on residents earning more than $1 million annually.
Because of quirks in New York City’s property tax system — especially how high-end properties are assessed — the burden of a property tax hike would not fall evenly.
In absolute dollar terms, wealthy homeowners pay more in taxes. But measured against their properties’ true market value, their effective tax rates are often lower than those paid by owners of modest homes or rental buildings.
The reason: New York’s convoluted assessment system.
Owners of one- to three-family homes benefit from strict caps that limit how quickly assessments can rise — no more than 6% a year and 20% over five years. In neighborhoods where prices have soared, those caps effectively suppress taxable values, lowering the effective rate for long-time owners of high-value homes.
Luxury condo and co-op owners benefit from another structural advantage.
Instead of being assessed based on sales prices, their buildings are valued using rents from comparable properties. Because there are relatively few comparable ultra-luxury rental units, the city’s highest-end condos and co-ops are often undervalued for tax purposes — and taxed at lower effective rates.
“The important thing to remember when dealing with a proposal to increase the property tax rate is that the underlying property tax system in New York City already has inequities baked into the process,” said Brad Greenberg, deputy director of NYU’s Furman Center.
That imbalance means raising rates across the board could amplify disparities.
Renters at Risk
Ironically, renters — who fueled Mamdani’s meteoric rise on a platform centered on affordability — may be among the hardest hit.
Though tenants don’t pay property taxes directly, landlords do, and higher levies are often passed through in the form of rent increases.
“It really impacts renters and first-time homebuyers,” said Jessica Chestler, an agent at Douglas Elliman. “Ultra-high net worth individuals will always find a way to have property in New York. But it’s really going to have the biggest impact on the middle and lower class.”
Rental buildings already face higher effective tax rates — about 4.3%, compared with roughly 3% for co-ops, condos and one- to three-family homes, according to nonprofit analyses.
On top of this, landlords are already paying higher insurance premiums, utility bills, and maintenance.
The disparity can be stark. In Hamilton Heights, two neighboring properties valued at roughly $4.2 million tell the story: a 43-unit apartment building paid about $71,500 in property taxes last year, while a single-family home next door paid about $12,200.
Under Mamdani’s proposal, the Citizens Budget Commission estimates taxes could rise by roughly $559 per unit annually on average, though the impact would vary. Market-rate tenants would be especially exposed in a city where rents already hover near record highs.
Council Member Susan Zhuang blasted the proposal, saying, “A nearly 10% property tax hike is unfair and unacceptable. Working families shouldn’t be the fallback plan.”
Queens Borough President Donovan Richards Jr. echoed the concern: “Under no circumstance should we consider balancing our budget on the backs of working-class New Yorkers, especially seniors on fixed incomes and public sector workers who keep our city running.”
Homebuyers Disadvantaged
Higher property taxes don’t just mean bigger bills — they can also make it harder for first-time buyers to qualify for mortgages. First, they would be facing higher rent. Second, lenders factor tax payments into debt-to-income calculations.
That dynamic could further cool demand in entry-level markets, slowing development at more affordable price points.
Nonetheless, Mamdani’s proposed 9.5% property tax increase would require City Council approval and is widely seen as a last-resort bargaining tool as the mayor presses Albany for additional aid or to increase taxes on the rich.
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