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Sale of $238M Manhattan Penthouse Spurs Talk of Creating Pied-A-Terre Tax

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With an increased public sentiment on the political left towards soaking the rich, the sale of a $238 million penthouse apartment in Manhattan has people talking about imposing taxes.

The apartment, located at 220 Central Park South, has spurred talk of finally taking action on a five-year-old bill that would create a so-called pied-à-terre tax in New York.       

The apartment was purchased in January by Kenneth C. Griffin, a hedge fund billionaire. The transaction, according to the New York Times, tops the price of the next most expensive home in the United States by more than $100 million, raised eyebrows. As the Times put it, it was “a stark reminder that when wealthy buyers like Mr. Griffin purchase expensive apartments as second homes or investments, New York City and the state get less financial benefits. If the buyers live out of state, they are not subject to state or city income taxes, and do not pay New York sales tax while outside the state.”         

A pied-à-terre tax levies an annual tax assessment on homes whose value is $5 million or more. According to those who are discussing it, it would apply – this is the key provision — to residences that are not the purchaser’s primary residence.

The heightened tax has been less than popular with legislators in New York for several years. Drafted by Democratic State Senator Brad Hoylman in 2014, it has been back-burnered by Senate Republicans. Now that the traditionally high-tax Democrats have taken over the majority in the Senate, it is being looked at anew.      

As reported by Curbed New York, “Rumors about Griffin’s uberpricey penthouse purchase began swirling in 2016, as plans for the building became more concrete. But Steven Roth, the head of Vornado Realty Trust, which is developing the building, has kept most details about the project under wraps; he’s also reportedly vetting every resident of the building personally. But closings began last fall, shedding some light on who is snapping up apartments in the luxury tower; since then, only a handful of apartments—all in the $12-$30 million range—have officially sold, per city records. Other rumored residents include Sting and his wife, Trudie Styler.”

“Earlier this month, Ken also paid $58.75 million for part of a building in Chicago, and $122 million for a home in London, setting records in both cities,” reported House Beautiful in January. “Still, the penthouse purchase represents the most expensive home ever bought in the wealthiest country on earth. What is he getting at 220 Central Park South that’s worth such an eye-watering price?”         

The majesty of the address is something to ponder, House Beautiful added. “You don’t have to be a New Yorker to appreciate the address: 220 Central Park South is, of course, on the southern end of the city’s iconic park, so the penthouse looks out over the entire 2.5 miles of green to the north (with Manhattan stretching out to the south). It falls between Seventh and Eighth Avenues, near Columbus Circle. Every residence in the building has a view of Central Park.”

 

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