The Pied-à-Terre Tax, Explained
New York now charges an annual surcharge on high-value NYC homes that aren’t anyone’s primary residence. Here’s what it is, who actually pays, and a calculator to estimate what it could mean for you — in plain English.
What This Tax Is
As part of the 2026 state budget, New York created an annual surcharge on certain high-value New York City homes — 1–3 family houses, condos, and co-ops — that are not the primary residence of the owner, an immediate family member, or a long-term tenant. Its official name is the “City Surcharge on Property That Does Not Serve as a Primary Residence,” but everyone calls it the pied-à-terre tax.
Unlike the mansion tax, which you pay once at closing, this is a recurring yearly bill, collected with your regular property taxes in semiannual installments. It runs for five years — July 1, 2026 through June 30, 2031 — unless Albany extends it.
The single most important thing to know
Through June 2028, the tax on condos and co-ops runs on the City’s Department of Finance “market value” — a formula based on rental income, not sale prices. That number is usually a small fraction of what your apartment would actually sell for — often just 5–15%. A condo that would trade for $3M can carry a City value under $1M and owe nothing at all. Always look up your real DOF value before assuming you owe this tax.
Who Pays — And Who Doesn’t
Subject To The Tax
- 1–3 family houses with a City market value of $5M or more
- Condo units with a City (DOF) value of $1M or more
- Co-op units whose share of the building’s DOF value is $1M or more
- …but only when the home is not a primary residence (see exemptions)
- A vacant unit is still taxable — vacancy is not an exemption
Exempt Or Excluded
- Primary residence of the owner
- Primary residence of immediate family: spouse, child, sibling, parent, grandparent, or grandchild
- Primary residence of a tenant or subtenant under a bona fide arm’s-length lease of at least one year
- Vacant land, and unsold sponsor units still under an offering plan
- Buildings without a required certificate of occupancy
- Rental buildings, hotels, and commercial property (different tax class entirely)
Own through an LLC or trust? The rules get technical: generally the majority owner of the entity must be the primary resident, trusts qualify only in limited cases, and if no one holds a majority interest the property is taxable no matter who lives there. This is a conversation for your tax advisor.
A Two-Phase System
The law runs in two phases. In Phase 1 (July 2026 – June 2028), houses and apartments are taxed on different tracks because the City values them differently. In Phase 2 (July 2028 – June 2031), the City moves condos and co-ops to sales-based values, and everything shares one schedule. The rate applies to your property’s entire City market value — not just the part above the threshold.
Phase 1 — Houses (Class 1)
| City Market Value | Rate | Annual Tax |
|---|---|---|
| Under $5M | No surcharge | $0 |
| $5M – $15M | 0.80% | $40,000 – $120,000 |
| Over $15M – $25M | 1.05% | $157,500 – $262,500 |
| Over $25M | 1.30% | $325,000+ |
Phase 1 — Condos & Co-ops (Class 2)
| City DOF Value | Rate | Annual Tax |
|---|---|---|
| Under $1M | No surcharge | $0 |
| $1M – $3M | 4.00% | $40,000 – $120,000 |
| Over $3M – $5M | 5.25% | $157,500 – $262,500 |
| Over $5M | 6.50% | $325,000+ |
Phase 2 — All Property Types
| Market Value | Rate | Annual Tax |
|---|---|---|
| Under $5M | No surcharge | $0 |
| $5M – $15M | 0.80% | $40,000 – $120,000 |
| Over $15M – $25M | 1.05% | $157,500 – $262,500 |
| Over $25M | 1.30% | $325,000+ |
Mind the cliff
Each bracket applies to the whole value, so crossing a line is expensive: a house valued at exactly $15,000,000 owes $120,000 a year — at $15,000,001, the bill jumps to $157,500. That single dollar costs $37,500, which is why challenging an inflated City valuation can really pay off.
Estimate Your Annual Surcharge
Answer four quick questions. The estimate updates as you type.
“Yes” includes your own primary home, an immediate family member’s, or a tenant’s under a 1-year-plus arm’s-length lease.
Find it free on the NYC Department of Finance property lookup — steps below.
Not your purchase price. In Phase 1 the City values condos and co-ops with an income formula that often lands at just 5–15% of what the unit would sell for.
Co-op owners: find your unit’s share of the building
The City values the whole building; your unit’s value is the building value × your share percentage. Your share count is on your stock certificate or proprietary lease.
Fill in all three and we’ll compute your unit’s value automatically.
How To Find Your City Value
- Go to the NYC Department of Finance property search and look up your borough and address.
- In the left-hand menu, click “Market Values and Assessments” and select the most recent final assessment roll (currently “2026–2027 Final”).
- Scroll to “Assessment Information” and note the total estimated market value — that’s the number this tax runs on.
- Co-op owner? The site shows your building’s value. Use the share calculator above to translate it into your unit’s value, or ask your managing agent.
REBNY also publishes a fact sheet and calculation tool for this tax.
Three Quick Examples
Brooklyn Townhouse
A Williamsburg townhome kept as a second residence carried a City value of $3,804,000 last year — under $5M, so no surcharge.
This year’s roll values it at $5,002,000. Crossing the $5M line puts the whole value in the 0.8% bracket.
Central Park West Condo
A condo pied-à-terre that would sell for well over $2M carries a City DOF value of just $909,389 — the income-based formula at work.
Because that’s under the $1M threshold, the owner owes nothing in Phase 1 — and would still owe nothing in Phase 2 unless its market value tops $5M.
Park Avenue Co-op
A prewar co-op building is valued at $96,491,000 with 47,250 total shares. One unit holds 720 shares — about a 1.52% stake.
The unit’s imputed value is 720/47,250 × $96,491,000 ≈ $1,470,339, which lands in the $1M–$3M bracket at 4%.
Quick Answers
Is this the same as the mansion tax?
No. The mansion tax is a one-time transfer tax paid at closing. The pied-à-terre tax is an annual, recurring surcharge billed with your property taxes every year the home isn’t a primary residence — and it comes on top of your regular property tax bill, with no abatements or credits against it.
My condo is worth $3M — do I owe this tax?
Quite possibly not, through June 2028. Phase 1 taxes condos and co-ops on the City’s DOF market value, which is typically only a small fraction of the sale price. Many apartments that sell for $2–3M carry DOF values under the $1M threshold. Look up your actual DOF value before assuming anything — then re-check for Phase 2, when values switch to a sales basis but the threshold rises to $5M.
My apartment sits empty most of the year. Am I exempt?
No — vacancy is not an exemption. If a covered home isn’t the primary residence of the owner, an immediate family member, or a 1-year-plus arm’s-length tenant, it’s taxable even when empty. Leasing it to a full-time tenant for at least a year is one common way owners avoid the surcharge.
I own my apartment through an LLC or trust. What happens?
Entity ownership gets strict treatment: for an LLC or corporation, the majority interest holder generally must be the one using the home as a primary residence; trusts qualify only in limited circumstances; and if no one owns a majority interest, the property is taxable regardless of who lives there. If you hold your home in an entity, talk to your tax advisor now.
How do I dispute it if the City says I owe?
The Department of Finance sends determination notices (the first round by August 30, 2026), and you have 30 days to appeal through DOF’s portal with proof of primary residence — a NY tax return at the address, a STAR credit, a qualifying lease, or proof of the family relationship. Overvalued? You can challenge the market value at the NYC Tax Commission, typically with an independent appraisal or comparable-sales analysis. Be accurate: penalties for bad-faith claims run up to 50% of the surcharge, and DOF can audit up to six years back.
When does it start, and when does it end?
It took effect July 1, 2026, with the first payment due January 1, 2027, billed alongside regular property taxes in semiannual installments. The law automatically expires June 30, 2031 unless it’s extended or replaced.
Not Sure How This Affects Your Plans?
Whether you’re weighing a pied-à-terre purchase, deciding whether to rent out a second home, or budgeting carrying costs for a sale — I’m happy to walk through your specific numbers with you.
Let’s TalkSources
- NY Tax Law Article 30-C, §§ 1350–1356 (Part HH, Ch. 59, Laws of 2026) — rate schedule, §1353 · imposition, §1350
- NYC Dept. of Finance adopted rule (19 RCNY Ch. 62, eff. July 14, 2026)
- NYC Comptroller fiscal analysis
- REBNY Second-Home Annual Tax resources
- Law firm analyses: Rosenberg & Estis · Holland & Knight · Pryor Cashman
This page is provided by Roger Dunkelbarger for general informational purposes only and is not legal, tax, or financial advice. Estimates assume each bracket’s rate applies to the property’s full market value (the reading supported by the statute’s text and most practitioner analyses, though at least one firm reads the brackets as marginal), and that current DOF valuation methods continue; the Department of Finance has not yet published its Phase 2 valuation methodology. Laws and agency guidance change — information current as of July 2026. Consult a qualified tax professional or attorney about your specific situation before making decisions.