New York City’s property market faces renewed uncertainty after Mayor Zohran Mamdani signalled a potential 9.5 per cent property tax increase if the state declines to approve higher income and corporate taxes on top earners. The proposal, framed as a fallback measure, would affect more than 3 million single-family homes, co-operatives and condominiums, as well as over 100,000 commercial buildings.
Mamdani presented two budget pathways to address a widening fiscal gap projected to rise from $5.4bn to $7bn over the next two years. His preferred option involves raising taxes on wealthy residents and corporations, a move requiring approval from Governor Kathy Hochul, who has ruled out income tax increases and is seeking re-election. The alternative would combine a property tax rise with the use of reserves, shifting the fiscal burden more directly on to homeowners and commercial landlords.
The scale of the proposed increase has prompted swift reaction from city officials and market stakeholders. Comptroller Mark Levine described the measure as extreme, noting reliance on aggressive revenue projections. City council leaders Julie Menin and Linda Lee argued that tapping reserves and raising property taxes during an affordability crisis should not be considered. Queens borough president Donovan Richards and Republican council member David Carr both criticised the regressive impact of property taxation, particularly on seniors and working households.
The implications extend beyond residential owners. A broad-based property tax rise would affect commercial real estate at a time when office demand and valuations remain under pressure, potentially influencing leasing decisions, investment appetite and capital flows. For developers and institutional investors, the proposal introduces additional policy risk into an already volatile market environment.
Negotiations between City Hall, the council and Albany are expected to continue. With the mayor positioning property taxation as a last resort, the debate underscores the central role of real estate in New York’s fiscal architecture and the sensitivity of property levies as a tool for closing structural budget deficits.
