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

On May 14, 2026, Governor Kathy Hochul detailed a proposed annual surcharge on New York City second homes — a "pied-à-terre tax" that would apply on top of the property taxes owners already pay.

But the structure is now specific enough to plan around — and for some condo and co-op owners, the real cost is larger, and arrives later, than the headlines suggest. Here's what the proposal would do, who it reaches, and what owners of high-value NYC apartments should be weighing now.

What the NYC pied-à-terre tax is (and isn't yet)

"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 proposal would place an annual surcharge on those properties — charged every year the home is held and no exemption applies. Where the plan stands today:

• It was detailed by Governor Hochul to legislative leaders on May 14, 2026, as part of negotiations over the overdue state budget, as reported by The New York Times and Gothamist.
• It is a proposal, not law. It requires State Legislature approval, and the details are still being negotiated.
• It is projected to raise about $500 million a year for New York City.
• As described, it would run for five years, after which lawmakers would vote on whether to renew it.

In short: the direction is set, but the fine print isn't. Treat the figures below as the proposal's current shape — not settled law.

Who would pay — and who's exempt

The surcharge would apply to owners whose primary residence is not in New York City. If the apartment is your main home — or a full-time New Yorker owns it — it would not be the target.

For non-residents, whether it applies comes down to the property type and its New York City Department of Finance valuation — 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 City valuation of $5 million or more.
• Condos and co-ops ("Class 2"): a City valuation of $1 million or more. Because the City assesses condos and co-ops far below their sale prices, the Governor's office estimates a $1 million City valuation corresponds to roughly a $5 million sale price.

Holding a property through a trust, LLC, or corporation would not sidestep the surcharge — as described, the controlling owner or beneficiary is treated as the owner.

Exemptions. A property would not be taxed if it serves as a primary residence for:

• the owner;
• an immediate family member of the owner; or
• a bona fide tenant under a genuine, longer-term lease.

How much it would cost

The proposal would tax the two property types on different scales.

Houses (Class 1) would be taxed on a graduated scale tied to City valuation:

Condos and co-ops (Class 2), for the proposal's first two years, would face a sliding scale between 4% and 6.5% of the City's valuation. That percentage looks far steeper than the house rates for a single reason: the City's valuation for a condo or co-op sits well below its market price, so a higher rate is applied to a smaller number.

The two-track design isn't permanent. From the third year, the City plans to re-value condos and co-ops based on estimated open-market prices — and then tax them on the same 0.8%–1.3% scale as houses. That shift is the part of the proposal that deserves the most attention, and it's 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 the proposal's first two years, the surcharge would key 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 — could 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 year three, the City plans to re-value condos and co-ops at open-market prices. The apartment that owed $0 under the old valuation would 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: don't 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 assessed close to market value, so this owner would fall in the top house bracket — 1.3% — from year one, a surcharge that would run in the mid-six figures annually. It would not change in year three.
• A condo with a $1.1 million City valuation (roughly a $5 million apartment). It would clear the condo threshold and be taxed on the 4%–6.5% scale in years one and two. When the City re-valued it toward market, the rate would drop to the house scale — but apply to a far larger number.
• An $8 million condo with a sub-$1 million City valuation. It would owe nothing in years one and two — then potentially a five-figure annual surcharge once Phase 2 revaluation caught up to its real value.

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

What owners can do now

The proposal isn't final, so this is preparation, not panic. Worth doing while the bill is still being negotiated:

• Confirm your residency position. The entire surcharge turns on whether NYC is your primary residence. If your situation is genuinely mixed, it's worth understanding how the test would apply — and what documentation supports it.
• Check whether an exemption fits. A family member's primary occupancy, or a genuine longer-term tenancy, can take a property out of scope. Lease terms and timing matter, so confirm them before relying on an exemption.
• Model your Phase 2 exposure, not just Phase 1. Especially for condos and co-ops, the post-revaluation figure is the real planning number.
• Factor it into buy and sell timing. For anyone weighing a non-resident purchase, an annual surcharge changes the long-term carrying cost — and lawmakers have separately floated a one-time 1% tax on all-cash NYC purchases of $1 million or more.

Elevated Advisement works with non-resident owners and buyers across Manhattan, and we are tracking this proposal 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?

No. It is a proposal. Governor Hochul detailed it for legislative leaders on May 14, 2026, as part of negotiations over an overdue state budget. It needs State Legislature approval before it could take effect, and the details are still being worked out.

Is the surcharge a one-time cost or annual?

Annual. Unlike the mansion tax, which is paid once at closing, the proposed surcharge would apply every year the property is held and no exemption applies — on top of existing property taxes. As described, it would run for five years before a renewal vote.

Does it apply to apartments that are rented out?

As described, no. A property genuinely leased to a tenant under a real, longer-term lease — or used as the owner's primary residence — would not be the target. Short-term rentals would not qualify.

Who counts as exempt family?

The proposal exempts a home used as the primary residence of an immediate family member of the owner. The exact qualifying relationships, and the proof required, are part of the detail still being finalized.

Is there also a tax on all-cash purchases?

Separately, lawmakers have floated a 1% tax on all-cash NYC real estate purchases of $1 million or more. It would be one-time at purchase — distinct from the annual pied-à-terre surcharge — and, like the surcharge, is still only a proposal.

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

Yes. Albany has floated versions of a pied-à-terre tax before — including a 2019 effort — none of which became law. The 2026 proposal is a separate, more recent attempt with a different structure.

This article describes a legislative proposal and is provided for general information — it is not legal or tax advice. Confirm specifics with a qualified advisor as the legislation develops.