The NYC pied-à-terre tax is a new annual surcharge on high-value New York City residential properties that no owner uses as a primary home. It took effect for the 2026–2027 tax year, applies to condominiums, cooperative apartments, and one-to-three family homes above set value thresholds, and runs on top of ordinary property taxes. Rates start between 4% and 6.5% of assessed value in the first two years and drop to between 0.8% and 1.3% once the city moves to market-based valuations in July 2028.
This is separate from the state’s mansion tax. The mansion tax is a one-time transfer tax paid at closing. The pied-à-terre tax hits the same property every year for as long as it stays above the threshold and is not someone’s primary residence.
Who Owes the Tax
The surcharge applies to a residential unit in New York City when no owner uses it as a primary home and the unit sits above the applicable value threshold. Three property types are covered: condos, co-op apartments, and one-to-three family houses.
During Phase 1 (the 2026–2027 and 2027–2028 tax years), condos and co-ops are covered once city-assessed value exceeds $1 million. One-to-three family homes are covered only above $5 million. Starting with the 2028–2029 tax year, the threshold rises to $5 million for condos and co-ops as well, exempting many units caught in the first two years.
Phase 1 Rates: July 2026 Through June 2028
For the first two tax years, the surcharge on qualifying condos and co-ops runs on a three-tier scale tied to the Department of Finance’s assessed value:
- $1 million to $3 million: 4% annually
- $3 million to $5 million: 5.25% annually
- Above $5 million: 6.5% annually
The rates use existing city assessments, which for co-ops and condos often sit well below open-market value. Even so, the percentages are high enough that some owners will see the pied-à-terre bill exceed their regular property tax.
Phase 2 Rates: Starting July 2028
Beginning with the 2028–2029 tax year, the Department of Finance switches to valuing units using comparable sales data rather than the older assessment method. Because that change tends to push valuations up sharply, the legislature paired it with lower percentage rates:
- $5 million to $15 million: 0.8%
- $15 million to $25 million: 1.05%
- Above $25 million: 1.3%
The lower percentages can be misleading. A property assessed at $3 million under the current methodology could be revalued at $15 million or more once comparable sales come in, so some ultra-luxury owners will pay more under Phase 2 than under Phase 1.
How Co-op Apartments Are Valued
Co-op ownership is a share in a corporation, not real estate, and the entire building is a single tax lot. That creates a valuation problem the statute handles differently in each phase.
In Phase 1, the Department of Finance uses what the statute calls an “imputed cooperative market value.” The city takes the building’s total assessed value and allocates a share to each unit based on ownership percentage. A 2% shareholder has an imputed value equal to 2% of the building’s assessment. Any unit with an imputed value above $1 million during Phase 1 is subject to the surcharge.
In Phase 2, the Department of Finance appraises individual co-op units using arm’s-length sales of comparable condos and co-ops, bypassing the statutory valuation restrictions that have kept co-op assessments low. The co-op corporation itself receives the aggregate bill for its qualifying nonprimary units, the same way it receives regular property tax bills. How the cost gets passed through to individual shareholders will depend on each building’s proprietary lease and board decisions.
Exemptions
Several categories of nonprimary-looking properties are outside the tax:
- Primary residence. If at least one owner uses the unit as a primary home, the surcharge does not apply.
- Family use. If a parent or child of at least one owner uses the unit as their primary residence, the property is exempt.
- Rented to an NYC primary resident. Units rented to a tenant who is a New York City primary resident are excluded.
- Below-threshold units. In Phase 2, condos and co-ops appraised below $5 million are exempt.
The rental exemption is worth reading closely. The statute does not set a minimum lease length or number of days the tenant must occupy the unit. It only requires that the tenant be a New York City primary resident. Short-term and vacation rentals almost certainly will not qualify, but the Department of Finance has not yet published detailed guidance on how it will verify tenant residency.
How Primary Residence Gets Decided
The statute identifies one relevant factor: whether the owner occupied the property for a majority of days in the calendar year. But the law uses the phrase “including but not limited to,” so the majority-of-days test is a starting point, not a bright line. The Department of Finance has broad authority to develop additional criteria.
That creates real uncertainty. Someone who spends more than 183 days a year in New York City but does not treat the specific unit as their primary residence can still owe the surcharge. The tax looks at how the property is used, not where the owner files income taxes. Traditional indicators like voter registration, driver’s license address, state income tax filings, and School Tax Relief (STAR) eligibility will likely factor in, but no single document will be dispositive. Owners who split time between multiple homes should keep records of physical presence at each address.
Properties Held Through LLCs and Trusts
Many luxury units are owned through LLCs or trusts, and how the tax applies to those structures is one of the biggest open questions in the law. Qualifying for an exemption will likely require disclosing the beneficial owner and demonstrating how the property is used. Owners should expect new reporting obligations and the possibility that ownership information previously kept private will need to be shared with city tax authorities.
The Department of Finance has not yet released implementation rules on entity ownership. Anyone holding a covered unit through an LLC or trust should consult a tax advisor before assuming an exemption applies or that the structure keeps the property outside the tax’s reach.
When Bills Will Arrive
The earliest the Department of Finance is expected to issue pied-à-terre bills is November 2026. Collection follows the city’s existing property tax calendar, with payments due quarterly or semi-annually depending on assessed value; properties assessed above $250,000 typically pay semi-annually.1Office of the New York City Comptroller. The Pied-à-Terre Tax and Its Potential Revenues
Legal challenges are widely expected and could delay implementation. Owners should plan as though the November 2026 billing date will hold.