Updated September 2026
As of July 1, 2026, New York City's pied-à-terre surcharge is law. It applies to high-value condos, co-ops, and one-to-three family houses that are not lived in as a primary residence, and it runs through June 30, 2031 unless Albany extends it. This guide lays out what it means for homeowners. It is not legal or tax advice, and the Department of Finance is still writing some of the rules, but here is what you need to know today.
Does This Apply to Me?
You are a "covered owner" if you own any of the following and the property is not a primary residence:
A one-, two-, or three-family house (Tax Class 1), a co-op apartment (as a tenant-shareholder), or a condominium unit. The law also reaches through trusts and entities: if you are the sole beneficiary of a trust that holds the property, or the majority owner of an LLC, partnership, or corporation that holds it, you are treated as the owner.
There are two exclusions worth knowing. Property without a required certificate of occupancy is excluded, and new-development units still held by the sponsor under an offering plan are excluded until they are first sold.
What Counts as a "Primary Residence"?
This is the question that determines whether you owe anything at all. A property is exempt if, as of the January 5th before the tax year begins, it is the primary residence of either:
You or an immediate family member. Immediate family means spouse, child, sibling, parent, grandparent, or grandchild. The owner (or family member) must be a natural person, not an entity.
A tenant. If you rent the home to someone who lives there as their primary residence, under a bona fide arm's-length lease of at least one year, the property qualifies. A valid sublease also counts.
The practical takeaway: a home you use on weekends and holidays, or that sits empty most of the year, does not qualify. A home your adult child lives in full-time does. A home rented to a full-time tenant on a one-year lease does.
One note for owners who rent: the exemption depends on the tenant actually using the apartment as their primary residence. Leases in the city are being updated to include a tenant representation to that effect, with the tenant responsible for the surcharge if the representation turns out to be false. If you are signing a new lease, ask your attorney or agent whether that language is in it.
How Much Is It? Phase 1 (July 2026 – June 2028)
During the first two years, the surcharge is calculated on the Department of Finance's existing market value for your property, the same number already on your assessment. For condos and co-ops, that number is historically far below what the apartment would actually sell for, which is why the Phase 1 rates look so high. The legislature set the rates against depressed values, not real ones.
Class 1: Single-Family and 1–3 Family Houses
The surcharge applies once DOF market value reaches $5 million.
DOF Market Value | Rate |
|---|---|
$5M to $15M | 0.80% |
Over $15M to $25M | 1.05% |
Over $25M | 1.30% |
Class 2: Condominiums
The surcharge applies once DOF market value reaches $1 million.
DOF Market Value | Rate |
|---|---|
$1M to $3M | 4.00% |
Over $3M to $5M | 5.25% |
Over $5M | 6.50% |
Class 2: Co-op Apartments
Co-ops use the same thresholds and rates as condos, but with a twist explained below: the value is "imputed" from the building's total value, and the bill goes to the building, not to you directly.
How Much Is It? Phase 2 (July 2028 – June 2031)
Starting July 1, 2028, the City switches to a new valuation method. DOF will estimate market value using comparable sales of similar condos and co-ops, without the statutory discounts that have kept co-op and condo assessments artificially low for decades.
Because those values will be much closer to real market prices, the rates drop and the threshold rises. In Phase 2, every property type uses the same schedule:
Comparable-Sales Market Value | Rate |
|---|---|
$5M to $15M | 0.80% |
Over $15M to $25M | 1.05% |
Over $25M | 1.30% |
The threshold becomes $5 million for everyone. A condo that fell below the $1 million DOF threshold in Phase 1 may find itself well above $5 million once comparable sales are used. In dollar terms, some owners will pay less in Phase 2 and others will pay considerably more. It depends entirely on how far your current DOF value sits below your real market value.
Why the Co-op Rules Are Different
A co-op building is assessed as a single parcel. There is no DOF market value for your individual apartment. So the law creates one, using a formula:
- Imputed unit value = Building DOF market value × (your shares ÷ total building shares)
In practice, imputed values for most co-op apartments are a small fraction of what the apartment would sell for, often well under 20%. That gap is exactly what Phase 2 is designed to close.
- How co-op billing works. DOF sends one bill to the cooperative corporation covering all the non-primary-residence units in the building. The board pays the City, then is required by law to collect each unit's share from the shareholder who triggered it. The surcharge is a lien on the building, so if a shareholder refuses to pay, the entire building is exposed. Expect your board to ask you to certify your residency status every year, and expect proprietary leases and house rules to be amended to give boards the tools to collect.
Where Do I Find My DOF Market Value?
This is the number that drives your Phase 1 surcharge, and it is public. Go to the DOF property search at nyc.gov (search by address, select your unit, then look under Market Values & Assessments for the 2026–2027 Final roll). The figure you want is the Estimated Market Value, not the Taxable or Billable Assessed Value that your regular tax bill is based on.
For co-ops, you will need the building's total market value and your share count, which your managing agent can provide.
What Happens Next, and What You Should Do Now
DOF notices have already gone out. For the 2026–27 fiscal year, the Department of Finance was required to issue initial determinations by August 30, 2026, and notices began arriving in late July. The notice states that DOF believes your property is not a primary residence.
If you received a notice and believe your home is a primary residence, respond. If you do nothing, the initial determination becomes final and can only be challenged through the Tax Commission. The documentation requirements are posted on the DOF's non-primary residence surcharge page. Expect to show evidence of where you actually live: the City can request your New York State income tax records to verify residency, and DOF may audit any certification for up to six years after it is filed.
If you disagree with DOF's valuation or its residency determination, you can apply to the NYC Tax Commission for correction, and after that seek judicial review. For this first year, the filing window runs from the date of your notice through the last filing date for 2027–28 applications. These are the only remedies the law allows; there is no separate lawsuit route.
Be accurate. Penalties of up to 50% of the surcharge can be imposed for certifications that are materially inaccurate and submitted negligently or in bad faith. Unpaid surcharges accrue interest and become a lien on the property.
What Is Still Unresolved
I want to be direct about this: the law leaves a great deal to DOF rulemaking, and the rules are not finished. Among the open questions:
- Two- and three-family houses with mixed occupancy. If you live in one unit and rent the others to weekenders, or you use the house as a pied-à-terre while a full-time tenant lives downstairs, the law does not say whether the surcharge is assessed unit by unit or on the whole building. Owners near the $5 million threshold should get legal advice.
- Co-op boards and non-paying shareholders. The statute requires boards to collect but does not say what happens when a shareholder refuses.
- Mid-year changes. How sales, deaths, and changes in occupancy during the year are handled is left to the rules.
- Whether the brackets are cliffs. The examples in this guide assume the full rate applies to the entire value once you cross a threshold. DOF has not confirmed whether that is how it will work.
- First-year leniency. Nothing in the statute promises it.
I will update this article as rules are published.
Questions I'm Hearing Most
- I own a condo in Manhattan and live in Florida. Do I owe this? If the condo's DOF Estimated Market Value is $1 million or more and no one uses it as a primary residence, yes, starting with the 2026–27 fiscal year. Check the DOF value first; many apartments are still below the Phase 1 threshold and will only be caught in 2028.
- My parents live in my apartment full-time. Is that a primary residence? Yes. Parents are immediate family under the law, and their full-time occupancy qualifies the property, provided you own it as an individual rather than through an entity.
- I rent my apartment to a full-time tenant. Am I exempt? Yes, if the tenant genuinely uses it as a primary residence under an arm's-length lease of at least one year. Make sure your lease includes a primary-residence representation.
- Does my 421-a or J-51 abatement reduce the surcharge? No. Abatements, credits, and exemptions do not apply to the surcharge.
- Will this go away? It is scheduled to expire June 30, 2031, unless the Legislature extends it.
If you'd like help understanding how the surcharge affects a specific property, or how it factors into a purchase or sale decision, I'd be glad to walk through the numbers with you.
This article summarizes New York Tax Law Article 30-C and NYC Administrative Code Title 11, Chapter 32, enacted as Part HH of the 2026–27 New York State budget. It is general information, not legal or tax advice. Consult your attorney or accountant regarding your own situation.
