The Pied-à-Terre Tax: New York City’s Newly Enacted Tax On High-Value Non-Primary Residences

The Bottom Line

• New York enacted an annual “pied-à-terre tax,” effective July 1, 2026, on high-value New York City non-primary residences.
• Owners may owe significant additional taxes each year, with trusts and business entities facing the same exposure as individual owners.
• New York City property owners should review ownership documentation, gather proof of primary residence for potential appeals, and watch for a notice of surcharge by August 30, 2026.

Owners of high-value New York City second homes may face a substantial new annual tax burden.

New York’s newly enacted “pied-à-terre tax” (the tax), effective July 1, 2026, imposes an annual surcharge on certain non-primary residences in New York City, including one-to-three family homes, condominiums and cooperative apartments. While the tax is aimed at luxury second homes, it also applies to properties owned through trusts, LLCs and other entities, creating potential exposure for a broad range of owners.

With the Department of Finance (DOF) expected to begin issuing surcharge notices by August 30, 2026, affected property owners should understand whether their property qualifies for an exemption and prepare documentation needed to challenge an assessment.

Governor Kathy Hochul signed the legislation into law on May 28, 2026. The tax is scheduled to remain in effect through June 30, 2031, unless renewed by the legislature.

Which Properties Are Subject to the Tax?

The tax applies only to one-to-three family homes and residential condominium and cooperative apartments that are not considered a primary residence.

The tax is avoided if the property is the primary residence of:

• the owner,
• a spouse, child, sibling, parent, grandparent, or grandchild of the owner, or
• a third-party tenant who rents the property in an arm’s length transaction (including month-to-month leases with appropriate documentation).

If the property is owned by a trust, LLC, partnership, or corporation, the law looks through the entity, but only if it holds the entire interest in the property. A trust’s sole beneficiary who lives in a residence qualifies as the owner for primary-residence purposes, as does a majority owner (greater than 50%) of an LLC, partnership, or corporation. Trusts with multiple current beneficiaries and entities with no majority owner cannot claim exemption.

How Are Properties Taxed?

While the tax is meant to target residences with a market value of $5 million or more, the current assessed market value of cooperative and condominium apartments is much lower than market value. Therefore, cooperative and condominium apartments will be taxed in a two-phased approach to handle this valuation issue.

Phase One: July 1, 2026 – June 30, 2028

Through June 2028, homes will be taxed on assessed market value, while cooperative and condominium apartments use a lower, income-based valuation method. Homes face a $5 million threshold, but cooperative and condominium apartments are taxed starting at a $1 million value. The DOF plans to implement a new valuation methodology for cooperative and condominium apartments by using comparable sales to bring the assessed market value up to market value.

The rate of taxation is dependent on the type of property and its value, as follows:

• One-to-Three Family Homes
  • $5-15 million: 0.8% tax rate
  • $15-25 million: 1.05% tax rate
  • Over $25 million: 1.3% tax rate
• Residential Condominiums and Cooperatives
  • $1-3 million: 4.0% tax rate
  • $3-5 million: 5.25% tax rate
  • Over $5 million: 6.5% tax rate

Phase Two: July 1, 2028 – June 30, 2031 (or longer if renewed)

Starting July 1, 2028, the city will value cooperative and condominium apartments using real comparable sales. All property types will then share the same $5 million threshold and rate schedule.

• All Properties
  • $5-15 million: 0.8% tax rate
  • $15-25 million: 1.05% tax rate
  • Over $25 million: 1.3% tax rate

How Will Owners Know if They Are Subject to the Tax?

Each year, the DOF will provide a notice of surcharge if it determines the owner’s property is, or may be, subject to the tax. For the upcoming fiscal year, the DOF will provide owners with notice by August 30, 2026.

An owner will have 30 days from that notice to appeal by submitting a certification that the property is the primary residence, along with supporting proof, such as a recent tax return listing the address as the owner’s home, or two of the following: a driver’s license, a voter ID card, or other documentation the city accepts.