New York City Pied-à-Terre Tax Guide for Property Owners

New York City has begun sending notices to property owners under its new non-primary residence property surcharge, commonly known as the pied-à-terre tax. The surcharge applies to certain higher-value residential properties across all five boroughs, including Manhattan, Brooklyn, and Queens, that are not used as a primary residence. It is payable in addition to regular New York City real property taxes.

The law took effect on May 28, 2026. The first surcharge is expected to appear on property tax bills due January 1, 2027, and the current deadline to apply for an exemption is October 6, 2026. Owners who receive a notice should review it promptly, but owners who do not receive one should not assume that the surcharge does not apply.

What is the pied-à-terre tax in New York City?

The surcharge is an annual charge on condominium and cooperative units valued at $1 million or more, and on one-, two-, and three-family homes valued at $5 million or more, that are not used as a primary residence. In July 2026, the New York City Department of Finance published a supplemental market value roll and began notifying owners whose properties it preliminarily classified as non-primary residences.

A notice is not a final determination that the surcharge is owed. The Department of Finance has expressly stated that receiving a letter does not establish liability. The reverse is also true: failure to receive a notice does not exempt a property. Under the statute, a failure to provide notice does not affect the validity of the surcharge.

Which properties are subject to the pied-à-terre surcharge?

The surcharge reaches condominium and cooperative units with a Phase 1 Market Value of $1 million or more, and one-, two-, and three-family homes at $5 million or more.

For the fiscal years beginning July 1, 2026, and July 1, 2027, the surcharge applies to two property categories, each with a different threshold.

One-, two-, and three-family homes. The surcharge applies when the Phase 1 Market Value determined by the Department of Finance is $5 million or more.

Condominium and cooperative units. The surcharge applies when the Phase 1 Market Value determined by the Department of Finance is $1 million or more.

Phase 1 Market Value is the value the Department of Finance assigns to the property for the fiscal year in which the surcharge is imposed. It is not the price the property would bring on the open market, and for condominium and cooperative units, particularly in Manhattan and brownstone Brooklyn, it is generally well below that price. Owners should review the value shown on the Notice of Property Value rather than rely on a recent purchase price or a comparable sale in the building.

Certain property is excluded from the surcharge. A property for which a temporary or permanent certificate of occupancy is required but has not yet been issued is not covered. Neither is a condominium or cooperative unit that remains subject to an offering plan and has not yet been sold, or an economic interest in which has not yet been transferred, by the sponsor who filed the plan.

How much is the pied-à-terre surcharge in New York City?

The rate ranges from 0.80 percent to 6.50 percent of the property’s full market value, depending on the property type and value band.

One-, two-, and three-family homes. The rate is 0.80 percent for a Phase 1 Market Value of at least $5 million and no more than $15 million; 1.05 percent for a value above $15 million and no more than $25 million; and 1.30 percent for a value above $25 million.

Condominium and cooperative units. The rate is 4.00 percent for a Phase 1 Market Value of at least $1 million and no more than $3 million; 5.25 percent for a value above $3 million and no more than $5 million; and 6.50 percent for a value above $5 million.

The applicable rate is imposed on the property’s entire market value, not only on the amount above the threshold. This creates a steep increase at each rate boundary. For example, a condominium with a Phase 1 Market Value of exactly $3 million would incur a $120,000 surcharge. If the value were $3,000,001, the 5.25 percent rate would apply to the full amount, producing a surcharge of approximately $157,500. That single dollar of additional assessed value would increase the annual surcharge by roughly $37,500. Owners whose properties fall near a rate boundary should consider whether a valuation challenge is appropriate.

Abatements, credits, and exemptions that reduce a property’s regular real property taxes do not reduce the surcharge.

What changes in 2028?

Beginning July 1, 2028, the threshold rises to $5 million for every covered property, the rates fall to 0.80, 1.05, and 1.30 percent, and condominium and cooperative units are valued by comparable sales rather than by income.

The surcharge is being implemented in two phases. For fiscal years beginning on or after July 1, 2028, the threshold for all covered property becomes a Phase 2 Market Value of $5 million, and the applicable rates become 0.80 percent, 1.05 percent, and 1.30 percent.

The valuation method also changes. For condominium and cooperative units, Phase 2 Market Value will be based on sales of comparable units. This replaces the income-capitalization method used during the first phase.

Who qualifies for the primary residence exemption?

A property is exempt if it serves as the primary residence of the owner, an immediate family member of the owner, a tenant or subtenant, or one or more individuals who together hold a majority interest in the entity that owns the property. If title is held in trust, primary residence is determined through the sole beneficiary or beneficiaries.

The statute defines immediate family to include a spouse, child, sibling, parent, grandparent, or grandchild. A property occupied by the owner’s parent may therefore qualify for the exemption, even if the City’s records do not currently reflect that occupancy.

Tenant occupancy may also qualify, but the tenancy must be established under a bona fide, arm’s-length lease with a term of at least one year.

For the current fiscal year, the relevant date is January 5, 2026. Primary residence is measured as of the taxable status date immediately preceding the fiscal year. Occupancy before or after that date does not control the determination. For example, an owner who occupied the property on January 5 but moved out in March is still assessed on the January 5 use, and an owner who moved in during March cannot rely on that occupancy for the current year.

The Department of Finance requests proof for each identified occupant, such as a recently filed federal or state income tax return, a driver’s license, or another form of identification issued by the Department of Motor Vehicles. If those documents are unavailable, a voter identification card may be submitted with additional proof of residence. A claim based on tenant occupancy requires a copy of the lease. The statute also recognizes a STAR exemption or credit received for the property during the preceding year as evidence of primary residence.

What is the deadline to file a pied-à-terre exemption in New York City?

The current exemption deadline is October 6, 2026. Missing it may have serious consequences. If an owner does not submit proof of primary residence to the Department by the deadline, the initial determination becomes final by operation of law and generally cannot be challenged later. The owner may lose both the exemption and the right to contest the determination.

An unpaid surcharge is also more than an ordinary debt. The surcharge, together with any penalties and interest, becomes a lien on the property, and it is treated as a tax lien that may be sold, enforced, or foreclosed in the same manner as other tax liens. It therefore falls within the scope of a title search and must be resolved before the property can be conveyed free and clear.

What should co-op shareholders in NYC do now?

A co-op shareholder should contact the cooperative’s managing agent to confirm whether the corporation received a notice, whether the unit is correctly identified, and who is filing the exemption application.

Co-op ownership creates an additional complication. The cooperative corporation is the taxpayer, and the surcharge is added to the building’s statement of account. The shareholder, however, holds the information needed to establish the exemption and is not the party directly billed. Shareholders who receive a notice, or whose units may fall within the surcharge, should coordinate promptly with the cooperative’s managing agent and legal counsel so the required documents are submitted on time.

How does an owner appeal a surcharge determination?

An owner applies to the Department of Finance by October 6, 2026, or appeals to the New York City Tax Commission on Form TC107 by March 1, 2027 for Class Two property and March 15, 2027 for Class One property.

Two review procedures are available, and they serve different purposes.

• The Department of Finance accepts exemption applications directly through October 6, 2026.
• The New York City Tax Commission accepts surcharge appeals on Form TC107. The filing deadline is March 1, 2027, for Class Two property and March 15, 2027, for Class One property.

An owner whose exemption application is denied by the Department of Finance may appeal to the Tax Commission by the applicable March deadline or within 30 days after the final determination notice, whichever is later. A challenge to the property’s market value must still be filed by March 1 or March 15, as applicable.

Only one surcharge appeal may be filed with the Tax Commission in a given year. If an owner asks the Tax Commission to decide the residency issue, the Department of Finance will stop reviewing its own submission and defer to the Commission. Owners should therefore choose the forum carefully.

What should property owners do now?

The surcharge is new, administrative guidance is still developing, and a challenge to the Department’s implementation remained pending as of today, September 21, 2026. Owners should nevertheless act based on the current deadlines and requirements.

• Confirm the market value listed on the Notice of Property Value.
• Determine who occupied the property on January 5, 2026, and gather documents establishing that occupancy.
• Review any trust or entity ownership structure to confirm that residency is established through a person recognized by the statute.
• Submit any exemption application well before October 6, 2026.

Lux Law is a New York residential real estate law firm representing owners, buyers and sellers of cooperative apartments, condominiums, and houses.

Attorney Advertising. This article provides general information about New York law and does not constitute legal advice.