Pied-a-terre Tax

What the tax is

The pied-à-terre tax is an annual surcharge added on top of the regular property tax on certain high-value New York City homes that are not used as a primary residence. It was enacted with the 2026–27 State budget (Part HH of Chapter 59 of the Laws of 2026), which became law on May 28, 2026. The State law is Article 30-C of the New York Tax Law, and the City provisions are in a new Chapter 32 of Title 11 of the City Administrative Code. The City’s Department of Finance (DOF) adopted rules to administer it in July 2026.

The State projected about $500 million a year in revenue. The City Comptroller’s April 2026 analysis estimated roughly $340 million to $380 million once rentals and other changes in behavior are taken into account.

The mansion tax is paid once, at closing. This surcharge is a recurring yearly charge for as long as a home is subject to it.

Who pays and who is exempt

For the first two years, the surcharge can apply to three kinds of property, and only when the home is not a primary residence:

• one- to three-family homes and townhouses (Class 1) with a DOF market value of $5 million or more
• condominium units with a DOF market value of $1 million or more
• co-op apartments with a DOF value of $1 million or more, worked out from the building’s value (see below)

Other property types, such as rental apartment buildings, commercial property and hotels, are outside these categories. The law also excludes:

• vacant land
• property that lacks a required certificate of occupancy
• new condo or co-op units the sponsor has not yet sold under an offering plan

The primary-residence exemption

According to DOF, a covered home is generally not subject to the surcharge if it is the primary residence of any of the following:

• the owner
• an immediate family member of the owner: spouse, child, sibling, parent, grandparent or grandchild
• a tenant or subtenant who is an individual (not a company) and lives there under a genuine arm’s-length lease at a fair market rent
• for property held by an LLC, corporation or partnership, the individuals who together hold a majority interest, and for a trust, its sole beneficiary or beneficiaries

The State law refers to a lease of at least one year, and DOF’s rules also describe how month-to-month tenants can document residency. DOF’s rules say a lease made mainly to avoid the surcharge does not qualify, and that having a primary residence elsewhere in the City does not exempt a second home.

How residency is determined

DOF looks at how a property is used as of the City’s taxable status date (January 5) for each fiscal year. Under its rules, it sends initial determinations by February 15 each year; for the first year the deadline was August 30, 2026. An owner who disagrees can submit proof, such as the most recently filed state or federal income tax return listing the address as the permanent home, or two other documents such as a New York driver’s license or a City voter card. For 2026–27 the exemption application deadline was October 13, 2026. DOF may audit a residency certification within six years of its submission, and penalties of up to 50% of the surcharge can apply to inaccurate information submitted negligently or in bad faith.

How the bill is calculated

The surcharge is one rate applied to the property’s full DOF market value once that value reaches a threshold. DOF’s rules state that the entire value is subject to the surcharge, not just the part above the threshold. It is not based on what the owner paid.

State law values condos and co-ops differently from houses, and their DOF market values are usually well below what the apartments would sell for. DOF says that, under State law, a condo or co-op valued by DOF at $1 million or more is generally comparable to a single-family home valued at $5 million or more. The actual gap varies from building to building.

The law runs in two phases.

Phase 1

Phase 1 (the 2026–27 and 2027–28 fiscal years) uses existing DOF values. Houses and apartments are on separate schedules, with higher percentage rates applied to the lower DOF values of condos and co-ops. The condo and co-op threshold is a $1 million DOF value.

Phase 2

From July 1, 2028, the law calls for condos and co-ops to be valued with a new method based on comparable sales. All covered property types would then use the house schedule, with a single $5 million threshold. As of October 2026 DOF had not published how it will calculate these values, so Phase 2 amounts are uncertain.

Rates

Because Phase 2 changes both the value and the rate schedule for condos and co-ops, a Phase 1 figure is not a reliable guide to later years. An apartment below the $1 million DOF threshold today could become subject to the surcharge if its new value is $5 million or more, while other apartments may owe less than they do now. The result depends on values DOF has not yet published.

Co-ops: one tax bill for the whole building

A co-op building is a single tax lot, and the corporation receives one property tax bill for the whole building. For a co-op apartment that is not a primary residence, DOF adds the surcharge to the building’s statement of account. The co-op corporation is responsible for paying it and may seek reimbursement from that shareholder.

Under the law, an unpaid surcharge, with any penalties and interest, is a lien on the property, which for a co-op is the building. In adopting its rules, DOF noted that co-ops could consider amending their proprietary leases to allocate these charges to the shareholders involved. Boards should discuss this with the building’s own counsel.

For the first two years, a co-op apartment’s value is worked out by dividing the building’s DOF market value according to the apartment’s share of the corporation’s total shares. DOF lists these unit values on a supplemental assessment roll. From July 2028 the law calls for the comparable-sales method described above.

Timing

May 28, 2026

The law is enacted with the State budget.

July 1, 2026

The surcharge applies starting with the 2026–27 fiscal year.

Phase 1

Fiscal years 2026–27 and 2027–28, on existing DOF values.

January 1, 2027

First surcharges for 2026–27 appear on the property tax bill due this date.

Phase 2

Fiscal years 2028–29 through 2030–31, with condos and co-ops on comparable-sales values.

June 30, 2031

The surcharge expires unless the Legislature extends it.

Questions about your apartment

If you are buying or selling a co-op, condo or townhouse, or deciding whether to keep a second home in the City, I’m happy to talk through how the surcharge may affect pricing, carrying costs and timing. I don’t give tax or legal advice, so for questions about your own tax bill or exemption, please speak with a tax adviser or attorney.

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