New York City has a new annual surcharge on residential property that is not the owner’s primary residence. Known as the pied-à-terre tax, it was enacted as part of the 2026-2027 state budget and took effect on July 1, 2026. For owners of higher-value co-ops and condos who live elsewhere, it is a meaningful new cost that sits on top of the property taxes they already pay.
The tax applies to covered owners of non-primary residences valued above certain thresholds. For co-ops and condos, the threshold is a New York City Department of Finance market value of $1 million or more. Because the city assesses these units well below their actual sale prices, a $1 million city valuation generally corresponds to a property that would sell for roughly $5 million. One to three family homes are covered at a market value of $5 million or more.
During the first phase, co-op and condo surcharge rates are 4% for valuations between $1 million and $3 million, 5.25% between $3 million and $5 million, and 6.5% above $5 million. Beginning in 2028, the city plans to move to a valuation method based on comparable sales, and the rate structure will be adjusted accordingly.
Several exemptions matter. A unit owned by an individual and used as a primary residence by that person or an immediate family member is generally not subject to the tax. A unit leased for at least one year to a tenant who uses it as their own primary residence may also qualify. Ownership through an LLC, corporation, or trust raises additional questions, and the Department of Finance is expected to issue further guidance on how these structures will be treated.
Co-op boards face a particular concern. A cooperative is a single tax lot, so if a shareholder does not pay the surcharge, the city can place a lien on the entire building. In effect, the corporation may become responsible for a noncompliant shareholder’s tax. Boards and managing agents should plan now for how affected units will be identified and how the surcharge will be collected.
The immediate steps are straightforward. The Department of Finance will notify owners it believes are subject to the tax no later than August 30, 2026, and owners can contest that determination by submitting proof of primary residence. Before the first bills arrive, confirm whether your unit is likely covered, gather documentation that supports your residency or any applicable exemption, and review how your ownership structure may affect your position.
Our team has over 35 years of experience helping boards, shareholders, and unit owners navigate New York City’s tax and regulatory requirements. For help understanding how the pied-à-terre tax may affect you or your building, Contact Us Today.
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