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

By Lux Law

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. For properties subject to the surcharge, the first charge will appear on the property tax bill due January 1, 2027. The deadline to apply to the Department of Finance for an exemption for the 2026-27 tax year was October 13, 2026. Appeals to the New York City Tax Commission remain open until March 1, 2027, for Class Two property and March 15, 2027, for Class One property. Owners who received a notice should review it promptly, but owners who did 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 certain properties that are not used as a primary residence. It applies to condominium and cooperative units valued at $1 million or more. It also applies to one-, two-, and three-family homes valued at $5 million or more. In July 2026, the New York City Department of Finance published a supplemental market value roll. It also began notifying owners whose properties it preliminarily classified as non-primary residences.

A notice is not a final determination that the owner owes the surcharge. 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. It also reaches 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 applies. It is not the price the property would bring on the open market. 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.

The surcharge excludes certain property. 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% to 6.50% 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% for a Phase 1 Market Value of at least $5 million and no more than $15 million; 1.05% for a value above $15 million and no more than $25 million; and 1.30% for a value above $25 million.

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

The applicable rate applies to the property’s entire market value, not only to 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% 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%. Valuation of condominium and cooperative units also shifts from income to comparable sales.

The surcharge applies 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. The applicable rates become 0.80%, 1.05%, and 1.30%.

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. The tenancy must rest on 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 may have occupied the property on January 5 and moved out in March. The January 5 use still controls. 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. Examples include a recently filed federal or state income tax return, a driver’s license, or another form of DMV identification. If those documents are unavailable, an owner may submit a voter identification card 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 deadline to apply to the Department of Finance for an exemption for the 2026-27 tax year was October 13, 2026. If an owner did not submit proof of primary residence to the Department by that date, the initial determination became final by operation of law. One route remains. According to the Tax Commission, an owner may still contest the Department’s initial primary residence determination on Form TC107. The owner must also challenge the property’s market value and file by March 1, 2027, for Class Two property or March 15, 2027, for Class One property.

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

What should co-op shareholders in NYC do now?

A cooperative shareholder should ask the cooperative’s managing agent three questions. Did the corporation receive a notice? Do the Department’s records identify the unit correctly? Did anyone file an exemption application for the unit?

Cooperative ownership creates an additional complication. The cooperative corporation is the taxpayer, and the surcharge appears on the building’s statement of account. The shareholder, however, holds the information needed to establish the exemption and is not the party directly billed. Any shareholder whose unit may fall within the surcharge should coordinate promptly with the managing agent and legal counsel. That coordination helps ensure a timely Tax Commission appeal.

How does an owner appeal a surcharge determination?

The Department of Finance accepted exemption applications through October 13, 2026. Appeals to the New York City Tax Commission on Form TC107 remain open until 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 accepted exemption applications directly through October 13, 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.

If the Department of Finance denies an exemption application, the owner may appeal to the Tax Commission. The deadline is the applicable March date or 30 days after the date of the final determination notice, whichever is later. An owner must still file any challenge to the property’s market value by March 1 or March 15, as applicable.

The Tax Commission accepts only one surcharge appeal 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, and administrative guidance is still developing. On November 4, 2026, a New York appellate court reversed a lower court’s September order that had required the City to cancel its initial notices. The court found that the challengers lacked standing. Owners should 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 the person establishing residency is one the statute recognizes.
• File any Tax Commission appeal on Form TC107 by March 1, 2027, for Class Two property or March 15, 2027, for Class One property.

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.