Why it matters

States are looking for new ways to fund public services without increasing taxes for most residents. As a result, second homes, vacation properties, and investment real estate are receiving more attention from lawmakers.

While full-time residents may benefit from lower taxes or larger exemptions, owners of non-owner occupied properties could face higher tax bills and additional rules. As more states consider similar measures, understanding how your property is classified and taxed will become increasingly important.

Important background: What is the non-owner occupied property tax?

Did you read our recent blog, Rhode Island’s $1M Property Tax: Rules, Exemptions, and Planning Considerations? Starting July 1st, 2027 Rhode Island will start collecting tax on non-owner occupied properties in the state (informally dubbed the “Taylor Swift Tax”. This is a tax on a residential property where the owner does not occupy the home for at least 183 days a year. Any property with a value over one million dollars will be subject to the tax. Rhode Island is one of the first states to implement such a tax and many other states are looking to do the same.

What are the rules in New York and Florida?

New York and Florida are both the latest states to look into their own versions of taxing non-owner occupied property. Each state has a different way of looking at how to implement this strategy but both solutions should help ease the burden of taxation from the majority of residents and shift it to different types of property or owners.

New York:

New York has enacted a budget that includes a New York City tax on high-value residential property that is not the primary residence of the owner. The “pied-a-terre” tax is a surcharge applicable to tax year 2026 on these high value secondary homes. This would be a progressive tax that would vary depending on the value of the home but tax for single family, two family, and three family will start with residences valued over $5 Million

Instead of raising residential property taxes on all New Yorkers, New York City will only be adding this surcharge. This will impact non-resident owners as well as investors holding real estate within the city. The goal is to shift the tax from residents who are already paying taxes in the city in other ways to non-residents who do not live in the state full time.

Florida:

On the opposite side of the spectrum is Florida. Instead of implementing a tax on non-owner occupied residences, the Governor is proposing a higher exemption to be put in place for homes that are owner-occupied. While not a direct tax on non-owner occupied residences, these residences will not be allowed to take the same exemption and will end up footing more of the bill. 

The proposal would increase the property tax exemption from $250,000 to $500,000. An amount which the Governor believes will allow 92% of Florida residents to have no property taxes. Similar to New York, this will help shift the tax burden to non-residents who are not living in Florida full time or already paying taxes in Florida.

What are the tax concerns and implications?

Property taxes have long been a way for local governments to pay for schools and public services such as police, firefighters, and road maintenance. It would be difficult to do away with completely and states seem to be looking at different ways to maintain their budgets while not over burdening their residents. In the future we will likely see more states looking at different ways to approach property taxes. 

What this means for taxpayers is that they will need to be aware of what is happening in their state or city to stay ahead of the changes and plan for future taxation. Vacation homes, second homes, and investment properties are likely to see more scrutiny, classification questions, and potentially higher taxes. Resident owners will hopefully see less of a rise in their own bills but should also be aware of any exemptions that may be available with these changes to reap the benefits.