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

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. Class 1 vacant land is excluded.
• 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.
• Excluded property: properties without a required certificate of occupancy, and unsold sponsor units under an active §352-e offering plan, are not covered.

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. Residency is self-certified. The Department of Finance is authorized to impose penalties of up to 50% of the surcharge for negligent or bad-faith misrepresentation, after notice and hearing.

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 value.

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)

Phase two only changes things for condos and co-ops, not houses. Starting July 1, 2028, the City moves condos and co-ops from the current income-based valuation method (capped under Real Property Tax Law section 581) to a market-based method that considers comparable sales. That brings the valuation closer to true market price, and condos and co-ops then move from the higher Phase one condo schedule (4.0% / 5.25% / 6.5%) to the same house schedule:

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

For houses, nothing changes between Phase one and Phase two: same Department of Finance market valuation, same rate schedule, both phases. The two-track design exists only because the City's current income-based valuation for condos and co-ops sits so far below their sale prices, and the part of the law that deserves the most attention is what happens to those condos and co-ops in Phase two. The Department of Finance has not yet published the specific comparable-sales methodology for Phase two values; it is expected to come through DOF rulemaking before the July 1, 2028 effective date. That 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 is based 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).
• A marquee Billionaires' Row penthouse asking around $42.5 million with a Department of Finance market value near $4.7 million. This is the cleanest illustration of the phase one to phase two jump. In phase one, the $4.7 million City valuation sits in the $3M to $5M condo bracket at 5.25%, so the surcharge runs around $247,000 a year. When the City revalues the unit closer to its open-market price in phase two, the same apartment shifts to the house schedule at the top 1.3% bracket on roughly $42.5 million, producing a surcharge in the range of $552,000 a year, on top of its base property tax.

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.

How co-op buildings will absorb this

A wrinkle worth flagging for co-ops, because it has not had much attention in the news coverage.

A co-op building is a single tax lot, owned by the cooperative corporation. Under the law, when one or more units in the building are non-primary residences that clear the threshold, the surcharge for those units is added by the Department of Finance to the building's statement of account. The building corporation pays the bill.

How a per-unit value is calculated for a co-op. Because the building has one DOF market value and no per-unit valuations, the law creates an "imputed cooperative phase one market value" for each apartment. The formula is:

Imputed unit value = Building DOF market value × (unit shares ÷ total building shares)

That imputed unit value is what gets tested against the $1 million threshold and, if it clears, the Phase one condo rate (4.0%, 5.25%, or 6.5%). A unit's share allocation drives everything, so it pays to know yours; it is on the proprietary lease, stock certificate, or annual maintenance statement.

Why the lien risk for the building is real. The surcharge is a lien on the cooperative property, just like the underlying real property tax. If the corporation fails to remit, the entire building is exposed to enforcement, including the possibility of a lien sale. That means a single shareholder who refuses to reimburse the building puts the whole property at risk, not just their own apartment.

The corporation then has to recover the surcharge from the shareholders whose units triggered it. For most co-ops, the existing proprietary lease and house rules do not provide a clean mechanism to charge an individual shareholder a surcharge of this size. Boards will likely need to amend the proprietary lease, or add a special-assessment provision, to authorize a per-shareholder pied-à-terre surcharge that mirrors the way sublet surcharges already work.

Without that step, the building could end up paying surcharges that are not cleanly allocable to the responsible shareholders, and the practical burden could fall partly on primary-residence owners who never used a pied-à-terre. For co-op boards, this is a near-term governance item, not a wait-and-see one. The first surcharge bills come due for fiscal year 2026-2027, and the Department of Finance notice cycle for that year runs through August 30, 2026.

What owners should do now

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

• Confirm your residency position. The surcharge hinges 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.
• Two- and three-family buildings need legal advice. The statute defines covered property and primary residence at the building level for Class 1, with no unit-level analysis mechanism. How the surcharge treats a two- or three-family near the $5 million threshold where some units are primary-resident and others are not is the biggest open question in the law and may not be resolved until DOF rules are issued.
• Factor it into buy and sell timing. For anyone weighing a non-resident purchase, an annual surcharge changes the long-term carrying cost.
• Model the closing costs of acquisition or sale. For non-resident buyers in particular, closing costs change the comparison between properties. Our NYC buyer closing cost calculator and NYC seller closing cost calculator give tailored estimates.

A note on the figures in this article and our calculator: every estimate here assumes the bracket rate applies to the property's full market value (the conventional reading and how the mansion tax works). The statute does not unambiguously specify cliff versus marginal treatment, and DOF rulemaking is expected to confirm. If DOF lands on a marginal approach, every estimate would come down materially; the framework otherwise stays the same.

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.

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