RESOLVING THE LEDGER
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New York City’s pied-à-terre tax was designed to extract money from second-home owners wealthy enough not to live in the city full-time. A side effect no one planned for: it’s pushing middle-class and working homeowners, people who already live in their houses, into estate-planning conversations they’ve never had before, at hourly rates they’ve never had to pay, for advice the wealthy have had access to for generations.
The rush of publicity accompanying the mayor’s office highlighting a list of over 680,000 New York properties that could theoretically be subject to a new tax has inadvertently advertised how public most property data is. And it’s advertised the benefits of seeking some totally legal privacy, or risk inadvertent doxxing, courtesy of Gracie Mansion.
“The wealthy and the ultra-high-net-worth have been in this game for a long time,” said Myles Fischer, a partner who co-leads the Trusts and Estates practice group at Harris Beach Murtha. “The rest are sort of catching up.” And that isn’t cheap. Many middle-class and blue-collar homeowners are “being forced into a situation where they have to sit down with lawyers” to get planning advice that families with means secured years ago. After all, he added, “it’s not that you have to be a rich person to have something worth protecting. We see it from across the board.”
The trigger, in this case, was a public records disclosure. When the DOF released its supplemental pied-à-terre assessment file, the coverage focused on the penthouses and the LLCs holding them. But the unfiltered file swept in far more than luxury properties—it included modest homes in Bayside, single-family houses in Staten Island, properties whose owners may have had no idea their name, address, and assessed value were sitting in a publicly searchable dataset. Many still don’t.
Fischer wasn’t surprised by the reaction. “Anonymity is desirable when it can be achieved,” he said, “but anonymity is also typically only one piece of the pie, so to speak. It’s part of the tax plan, part of the estate plan, part of the asset protection, limitation-on-liability sort of pie.” Privacy, in other words, is the door. The estate planning is what’s behind it.
The trip-and-fall scenario
For Fischer, the most fundamental reason to move real estate into an LLC or trust has nothing to do with taxes or public records. It’s liability—the kind that applies to a million-dollar house in Staten Island as directly as it does to a Central Park South penthouse. (The median price to buy a cooperative in Manhattan is $850,000 and to buy a condo it’s $1.75 million, netting out to $1.225 million combined.)
The scenario he describes is simple: someone slips and falls on your property. If the property sits inside an LLC or trust rather than in the owner’s name, the injured party can sue the entity, but the owner’s personal assets—savings, other real estate, retirement accounts—stay out of reach. “The only thing that’s subject to that lawsuit would be the assets inside that LLC or trust,” Fischer said. “All my personal assets would be protected.” There are ways to pierce that structure if the entity is mismanaged, he noted, treating it “like a piggy bank,” commingling funds, failing to maintain proper records, but a properly maintained LLC keeps personal exposure bounded.
Fischer pushed back, gently, on the idea that this kind of planning is exclusively a rich person’s game. Discussing homeowners who could get caught up in the pied-à-terre property list, he said there is a case to be made for even the mom-and-pop homeowners. “You have these poor people in Staten Island whose names are on Mamdani’s list, and in their mind they’re poor. They have a million-dollar house, but that’s probably five times their other assets. It’s quite perverse.” Mom-and-pop owners, he said, use the same structures as the ultrawealthy for four core reasons: to limit liability, organize assets, avoid probate, and mitigate taxes.
Beyond liability, Fischer identified three other reasons his clients, across income levels, use these structures: organizing assets within an estate plan, avoiding probate, and mitigating taxes.
The look-through caveat
Before anyone rushes to restructure, there’s an important limitation that Denisse Moderski, a state and local tax partner at PKF O’Connor Davies, flags immediately: moving a property into an LLC or trust does not, by itself, get an owner off the hook for the pied-à-terre surcharge.
“Even with a trust, the city has come out that they are applying a look-through,” she told Fortune . “So even if you start moving properties into a trust, you still have to wonder what records the city is going to have to look through—because there’s a potential risk here that even if you transfer this property into an LLC or an entity, this look-through rule would apply and it could still subject a taxpayer to the surcharge.”
The look-through rule means the city treats the beneficial owner of an entity as the taxpayer for surcharge purposes, so a name change on the deed doesn’t change who owes the bill. Restructuring may address privacy and liability. It does not address the surcharge itself. “They have assessed this value on properties at much lower value, but the rate is much higher,” Moderski added. “When you’re thinking about assessment, you have to look at it from both angles.”
That said, she has seen an uptick in outreach from owners who aren’t the typical trust-and-estates client. “I can tell, especially with higher-profile posts, they may want to because they don’t want this public information to be out there.” Privacy remains a real mo...
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