NYC Pied-à-Terre Tax 2026: Status, Rates, and What It Means for Owners

May 28

Current status (updated May 28, 2026). The NYC pied-à-terre tax has passed. The New York State Legislature approved it on May 27, 2026 as part of the 2026-2027 state budget. It is codified as Article 30-C of the New York Tax Law (added by Part HH of the budget bill) and applies to New York City fiscal years beginning on or after July 1, 2026. The law is set to expire on June 30, 2031 unless renewed.

On May 27, 2026, the New York State Legislature passed an annual surcharge on New York City second homes, on top of the property taxes owners already pay. The tax was passed as part of the 2026-2027 state budget and takes effect for NYC fiscal years beginning July 1, 2026. For some condo and co-op owners, the real cost is larger, and arrives later, than the headlines suggest. Here is what the law does, who it reaches, and what owners of high-value NYC apartments should be weighing now.

What the NYC pied-à-terre tax is

"Pied-à-terre," French for "foot on the ground," describes a home kept for occasional use by someone whose primary residence is elsewhere. In New York City, that usually means a condo or co-op owned by a person who lives, and pays income tax, somewhere else.

The new tax, codified as Article 30-C of the New York Tax Law, places an annual surcharge on those properties, charged every fiscal year the home is held and no exemption applies. The headline facts:

Passed: May 27, 2026 by the New York State Legislature, as part of the 2026-2027 state budget, as reported by The Wall Street Journal and CNBC.
Effective: Fiscal years beginning on or after July 1, 2026.
Expected revenue: About $500 million a year for New York City (Governor's office estimate).
Properties affected: Roughly 10,000 homes are expected to be subject, per the Governor's office.
Sunset: The law expires on June 30, 2031 unless renewed.

It is no longer hypothetical. The first bills under it will come due in NYC fiscal year 2026-2027.

Who pays, and who's exempt

The surcharge applies to owners whose primary residence is not in New York City. If the apartment is the owner's main home, or a full-time New Yorker owns it, it is not the target.

For non-residents, whether it applies comes down to the property type and its NYC Department of Finance market value (the City's own assessed figure, which is not the same as market price; more on that gap below):

Houses (one- to three-family, "Class 1"): a Department of Finance market value of $5 million or more.
Condos and co-ops ("Class 2"): a Department of Finance market value of $1 million or more. Because the City assesses condos and co-ops far below their sale prices, the Governor's office estimates that a $1 million City valuation corresponds to roughly a $5 million sale price.

Holding a property through a trust, LLC, partnership, or corporation does not sidestep the surcharge. The law looks through to the controlling owner: a sole beneficiary of a trust, or a majority partner, shareholder, or member of an entity, is treated as the owner.

Exemptions. The property is treated as a primary residence (and not taxed) if it is occupied as the primary residence of:

the owner;
an immediate family member of the owner, defined in the law as a spouse, child, sibling, parent, grandparent, or grandchild; or
a tenant under a bona fide lease of at least one year, negotiated in an arms-length transaction with a natural person.

The NYC Department of Finance makes an initial non-primary-residence determination each year. For fiscal year 2026-2027, it must send a notice to affected owners by August 30, 2026, giving them a chance to submit proof of primary residence before the surcharge is finalized.

How much it costs

The law applies in two phases. The first runs for the first two fiscal years (July 1, 2026 through June 30, 2028) and uses a transitional rate structure. The second begins July 1, 2028 and uses a revaluation of condos and co-ops at market.

Phase one (FY 2026-2027 and FY 2027-2028)

For Class 1 houses with a Department of Finance market value of $5 million or more, on a graduated scale:

$5M to $15M: 0.8%
Over $15M to $25M: 1.05%
Over $25M: 1.3%

For Class 2 condos and co-ops with a Department of Finance market value of $1 million or more, on a graduated scale:

$1M to $3M: 4.0%
Over $3M to $5M: 5.25%
Over $5M: 6.5%

The condo and co-op percentages look much higher than the house rates for a single reason: the City's valuation for a condo or co-op sits well below its market price. A higher rate is applied to a smaller number.

Phase two (FY 2028-2029 onwards)

Starting July 1, 2028, condos and co-ops are valued using a method that considers sales of comparable units (without the restrictions of Real Property Tax Law section 581), bringing the valuation closer to market price. All covered properties are then taxed on the same house schedule:

$5M to $15M: 0.8%
Over $15M to $25M: 1.05%
Over $25M: 1.3%

That two-track design is the part of the law that deserves the most attention, and it is covered next.

Because the surcharge turns on your specific property's City valuation, the only way to know your number is to look it up. Our NYC pied-à-terre tax calculator pulls your property's Department of Finance valuation and estimates the surcharge directly.

The hidden trap for condo and co-op owners

Here is what most of the news coverage has skipped.

New York City assesses condos and co-ops using a formula that produces values far below market price, often by 80%, 90%, or more. A condo that would sell for $8 million can carry a City valuation well under $1 million.

In phase one, the surcharge keys off that low City valuation. So a meaningful number of genuinely high-value apartments, units worth $5 million to $10 million on the open market, can have a City valuation below the $1 million threshold and owe nothing at all in years one and two.

That is not the reprieve it appears to be. From phase two (starting July 1, 2028), the City re-values condos and co-ops at open-market prices, using comparable sales without the section 581 restrictions. The apartment that owed $0 under the old valuation will suddenly be assessed near its true worth, and taxed on it. A modest, or even zero, first-phase bill can become a substantial one.

The takeaway for condo and co-op owners: do not read a low first-year estimate as the end of the story. The figure that matters for long-term planning is what the surcharge looks like once the apartment is valued at market.

What this means for your apartment

A few illustrative scenarios (directional, not exact, since every property's City valuation differs):

A $28 million Upper East Side townhouse. Houses are valued at or near market, so this owner falls in the top house bracket, 1.3%, from fiscal year 2026-2027, a surcharge that runs in the mid-six figures annually. The figure does not change in phase two.
A condo with a $1.1 million Department of Finance market value (roughly a $5 million apartment). It clears the condo threshold and is taxed at 4.0% of the City valuation in phase one, on the order of $44,000 a year. When the City re-values it toward market value in phase two, the rate drops to the 0.8% house schedule applied to about $5 million, so the surcharge stays in roughly the same range.
An $8 million condo with a sub-$1 million City valuation. Owes nothing in phase one, then potentially in the mid-five-figure range once phase two revaluation catches up to its real value (at $8 million market on the 0.8% house schedule, around $64,000 a year).

The pattern: houses face their full exposure immediately; many condos and co-ops face it on a delay. Planning around the first-year number alone can badly understate the long-term cost.

What owners should do now

The law is final, so this is planning, not lobbying. Worth doing now:

Confirm your residency position. The surcharge turns on whether NYC is your primary residence. If your situation is mixed, understand the test and what documentation supports your status. The Department of Finance can require documentation including your New York State income tax return, evidence of the STAR exemption or related credits, and evidence of any qualifying tenancy.
Check whether an exemption fits. An immediate family member's primary occupancy (spouse, child, sibling, parent, grandparent, or grandchild), or a bona fide lease of at least one year at arms-length with a natural person, takes a property out of scope.
Model your phase two exposure, not just phase one. Especially for condos and co-ops, the post-revaluation figure is the real planning number.
Watch for your DOF notice. For fiscal year 2026-2027, the City must send notices to affected owners by August 30, 2026, with an opportunity to submit proof of primary residence.
Factor it into buy and sell timing. For anyone weighing a non-resident purchase, an annual surcharge changes the long-term carrying cost.

Elevated Advisement works with non-resident owners and buyers across Manhattan, and we are tracking the rollout and Department of Finance rulemaking closely. To understand your specific exposure, get in touch with our team, or start with our pied-à-terre tax calculator for an estimate based on your property's City valuation.

Frequently asked questions

Is the NYC pied-à-terre tax law yet?

Yes. The New York State Legislature passed it on May 27, 2026 as part of the 2026-2027 state budget. It is codified as Article 30-C of the New York Tax Law and applies to New York City fiscal years beginning on or after July 1, 2026. The law is set to expire on June 30, 2031 unless lawmakers renew it.

Is the surcharge a one-time cost or annual?

Annual. Unlike the mansion tax, which is paid once at closing, the surcharge applies every fiscal year the property is held and no exemption applies, on top of existing property taxes. The law runs for five fiscal years (through June 30, 2031), at which point it expires unless renewed.

Does it apply to apartments that are rented out?

A property is treated as a primary residence (and not taxed) when occupied by a tenant under a bona fide lease of at least one year, negotiated in an arms-length transaction with a natural person. Short-term rentals do not qualify.

Who counts as exempt family?

The law defines "immediate family member" as a spouse, child, sibling, parent, grandparent, or grandchild. If the property is the primary residence of one of those family members, the surcharge does not apply.

What are the rates?

In phase one (fiscal years 2026-2027 and 2027-2028), Class 1 houses with a Department of Finance market value of $5 million or more are taxed at 0.8% ($5M to $15M), 1.05% (over $15M to $25M), or 1.3% (over $25M). Class 2 condos and co-ops with a Department of Finance market value of $1 million or more are taxed at 4.0% ($1M to $3M), 5.25% (over $3M to $5M), or 6.5% (over $5M). From phase two (fiscal year 2028-2029 onwards), condos and co-ops are revalued closer to market and all covered properties are taxed on the house schedule (0.8%, 1.05%, or 1.3%).

Hasn't a pied-à-terre tax been proposed before?

Yes. Albany floated versions of a pied-à-terre tax for years, including a 2019 effort that did not become law. The 2026 law is a separate effort that passed on May 27, 2026 and is codified as Article 30-C of the New York Tax Law.

This article describes the NYC pied-à-terre tax as enacted in Part HH of the 2026-2027 New York State Budget Bill (Article 30-C of the New York Tax Law). It is provided for general information and is not legal or tax advice. Confirm specifics with a qualified advisor.

Elevated Team