Beginning July 1, 2026, New York City will impose an annual property tax surcharge (often referred to as the “pied‑à‑terre tax”) on certain high‑value residential properties that do not serve as a primary residence—i.e., luxury second homes.
What Properties Are Affected?
The surcharge applies to “covered property,” including individual co‑op units within covered cooperative properties, that:
- is not the primary residence of the owner; and
- is not rented to a primary resident or occupied by the owner’s family.
Phase 1 – Value Thresholds and Effective Dates
Phase 1 applies to New York City fiscal years beginning on or after July 1, 2026, and before July 1, 2028. A property is potentially subject to the surcharge in Phase 1 if its market value meets the following thresholds:
- Class 1 property (one‑, two‑, or three‑family homes): market value ≥ $5 million.
- Residential condominium units: market value ≥ $1 million.
- Residential cooperative dwelling units: market value ≥ $1 million.
Phase 1 Surcharge Rates
For fiscal years beginning on or after July 1, 2026 and before July 1, 2028, the Phase 1 surcharge rates are:
Class 1 property (covered, non‑primary residence)
- $5 million–$15 million: 0.8% of Phase 1 market value.
- $15 million–$25 million: 1.05%.
- $25 million: 1.3%.
Covered condo and co‑op units (non‑primary residence)
- $1 million–$3 million: 4.0% of Phase 1 market value.
- $3 million–$5 million: 5.25%.
- $5 million: 6.5%.
Phase 2, which is expected to begin with fiscal years starting on or after July 1, 2028, will rely on comparable‑sales‑based valuations, with a single $5 million value threshold for all covered properties (including co‑ops).
How Will Owners Be Notified?
The New York City Department of Finance (DOF) must annually determine whether a property that meets the value thresholds is not a primary residence and then issue a notice to the owner. For the fiscal year beginning July 1, 2026, DOF must provide this notice no later than August 30, 2026, and the notice must include an opportunity for the owner to submit proof of primary residence.
Who Can Qualify for an Exemption?
A property is not subject to the surcharge if it is the primary residence of any of the following:
- the owner of the property;
- a tenant or subtenant;
- one or more individuals who collectively hold a majority interest in the LLC, corporation, or partnership that owns the property;
- an immediate family member of the owner or majority holder; or
- the sole beneficiary (or beneficiaries) of a trust.
If you submit acceptable proof that the property meets any of these criteria, you will not have to pay the surcharge.
Exemption Application and Deadlines
Owners seeking an exemption must file a surcharge exemption application and provide documentation establishing that the property is a primary residence of an eligible person. Key initial deadlines are:
- Residential homes and condos: August 21, 2026.
- Cooperative units: August 24, 2026.
Property owners must include supporting documentation with the application. DOF provides a list of acceptable documents and additional guidance regarding the surcharge, exemption criteria, and FAQs on its website:
https://www.nyc.gov/site/finance/property/non-primary-residence-surcharge.page
Filing the exemption application allows owners to establish primary-residence status before DOF makes its final determination. Alternatively, an owner may wait to receive DOF’s determination notice and then appeal an adverse decision. For the fiscal year beginning July 1, 2026, DOF must mail determination notices by August 30, 2026, and affected owners will have 30 days from the notice date to file an appeal.
Next Steps for Property Owners
Owners of high‑value NYC residential properties that are used as second homes or occasional residences should:
- Determine whether the property meets the Phase 1 value thresholds.
- Evaluate whether the property may qualify as a primary residence for exemption purposes.
- Gather supporting documentation in anticipation of filing an exemption application (if applicable).
- Monitor DOF notices and deadlines, particularly for the initial fiscal year beginning July 1, 2026.
If you have questions about how the pied‑à‑terre surcharge applies to your property or need assistance with the exemption application or appeal process, please contact our office.
