You owe New York City’s pied-à-terre tax only if you own a one- to three-family home the Department of Finance values above $5 million, or a condo or co-op unit it values at $1 million or more, and no owner, family member, or tenant lives there as a primary residence. The first charge appears on the property tax bill due January 1, 2027.
Last updated October 28, 2026.
Key takeaways
- The surcharge runs at 0.8% to 6.5% of the Department of Finance market value for tax years 2026-27 and 2027-28.
- A home is exempt when the owner, an immediate family member, or a tenant lives there as a primary residence.
- A September 29 court ruling faulted the city’s rollout, but the city appealed and the first bill is still due January 1, 2027.
In this short video, I walk through the questions owners, buyers, and investors are asking about the tax.
Who has to pay the pied-à-terre tax?
The tax applies to high-value New York City homes that are not anyone’s primary residence. The NYC Department of Finance (DOF) sets the rates as a percentage of its market value:
| Property type | DOF market value | Annual rate |
|---|---|---|
| One- to three-family home | $5 million to under $15 million | 0.8% |
| One- to three-family home | $15 million to under $25 million | 1.05% |
| One- to three-family home | $25 million or more | 1.3% |
| Condo or co-op unit | $1 million to under $3 million | 4.0% |
| Condo or co-op unit | $3 million to under $5 million | 5.25% |
| Condo or co-op unit | $5 million or more | 6.5% |
The condo and co-op threshold sounds low until you see how DOF values those units. Katten’s August 7, 2026 update explains that DOF values the building as if it were a rental and allocates that value to units, which usually lands well below the sale price. FOX 5 NY estimated in May 2026 that a condo that sold for $18.5 million, with a DOF value of $1.1 million, would owe about $45,115 a year. The statute runs through June 30, 2031 unless extended, according to Dechert. For another city tax built on price thresholds, see our post on whether $1 million is still a lot of money in New York City.
What counts as a primary residence?
A property is exempt when someone lives there as their main home. DOF says the surcharge generally does not apply to the primary residence of:
- The owner
- A tenant or subtenant
- A person holding a majority interest in the LLC, corporation, or partnership that owns it
- An immediate family member of the owner or majority interest holder
- The sole beneficiary or beneficiaries of a trust that owns it
Dechert’s June 5, 2026 summary describes the test as occupancy for more than half the year and defines immediate family as a spouse, child, sibling, parent, grandparent, or grandchild. Occasional use does not count. If no one holds a majority interest in the LLC that owns a home, Dechert notes, the surcharge applies unless an arm’s-length tenant lives there full time. Owners using a trust or entity should review it with their own attorney.
Does renting out your apartment avoid the tax?
Renting can qualify a home, but only when the tenant lives there as a primary residence. DOF asks for a lease plus one rental document, such as a utility bill or proof of rent payment, or a tenant affidavit plus two rental documents. Katten notes that a month-to-month tenancy can qualify. Two limits matter:
- A unit that sits empty, including while the owner looks for a tenant, will likely be taxed, according to Katten.
- A tenant who uses the apartment as their own second home does not qualify.
Co-op owners should also check the building’s sublet rules, since many boards limit how often and how long shareholders can sublet.
What did the court ruling change?
The ruling changed how the city must identify owners, not whether the tax exists. On September 29, 2026, Justice Wayne M. Ozzi of the State Supreme Court in Richmond County ruled in O’Brien v. City of New York that DOF’s notices to about 17,000 owners were arbitrary and capricious and ordered the city to redo the process, according to Day Pitney. The city appealed and invoked an automatic stay, so the rollout continues. Habitat Magazine reported on October 16 that the appeal is expected to be decided by November 10. A separate suit, Ross v. State of New York, challenges the tax’s constitutionality and is still pending, Day Pitney reports.
When is the first bill due, and what if you missed the deadline?
The first surcharge appears on the property tax bill due January 1, 2027, according to DOF, and Withum reports DOF expected to issue those bills around November 15, 2026. Regular property tax abatements and exemptions do not reduce the surcharge, according to Dechert.
The 2026-27 exemption deadline was October 13, 2026. Habitat Magazine reported that upwards of 11,000 owners applied and more than 6,800 exemptions were granted. Owners who were denied, or who dispute DOF’s value, can go to the NYC Tax Commission, which DOF says can also decide residency alongside a value challenge. A tax attorney or CPA can say which route fits.
What changes for condos and co-ops in 2028?
Starting July 1, 2028, condos and co-ops move to the same $5 million threshold and 0.8% to 1.3% rates as one- to three-family homes, according to Dechert, using a new DOF model based on comparable sales that Dechert expects to raise values. FOX 5 NY estimated the same $18.5 million condo would then owe about $194,250 a year. Fewer units will qualify, and the model is not yet published.
How The Michael J. Franco Team Approaches It
Second-home owners in Manhattan and Brooklyn usually ask the team one question: keep it, rent it, or sell it. The team treats it as a carrying-cost decision:
- Confirm the facts. Find the DOF market value and any notice or determination letter, and share both with the owner’s attorney or CPA.
- Price the full cost of keeping it. Add the surcharge to maintenance or common charges, property tax, and insurance, then weigh that against how often the owner uses the home.
- Test the rental option. Check the board’s sublet policy, the likely rent, and whether a full-time tenant fits the owner’s plans.
- Know the sale value. A current valuation shows what a sale would net after transfer taxes and closing costs.
If selling is the answer, how the apartment is introduced to the market matters as much as price, as our post on whether you only get one chance to debut a Manhattan listing explains.
Frequently asked questions
What is the pied-à-terre tax in NYC?
It is an annual surcharge on high-value New York City homes that are not anyone’s primary residence. It applies to one- to three-family homes the Department of Finance values above $5 million and condo or co-op units it values at $1 million or more, at 0.8% to 6.5% of that value.
Is my NYC apartment exempt if I rent it out?
It can be. The exemption applies when a tenant or subtenant lives there as a primary residence. The Department of Finance asks for a lease and one rental document, or a tenant affidavit and two rental documents. A month-to-month tenancy can qualify, according to Katten, but an apartment left empty while you look for a tenant will likely be taxed.
What if I missed the October 13 exemption deadline?
The Department of Finance says owners who are denied, or who dispute the value it assigned, can go to the NYC Tax Commission, which can decide primary residency together with a value challenge. Because the right route depends on the property and the paperwork, talk with a tax attorney or CPA soon, before the January 1, 2027 bill comes due.
Know your numbers before January
The pied-à-terre tax is now part of the cost of owning a part-time home in New York City. The rules are still moving through the courts, and the condo and co-op formula changes in 2028. Owners who know their numbers now will have more options than owners who wait for the bill.
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About the author. Michael J. Franco is a top producing broker at Compass, ranked #13 in Manhattan and #100 nationally by The Wall Street Journal and Real Trends. With over 20 years of experience as a broker, attorney, and investor, Michael brings legal and financial precision to every Manhattan real estate transaction.
This article explains how New York City’s non-primary residence surcharge works and is not legal or tax advice. Rules and court decisions may change. Consult your own attorney or CPA about your property. Compass is a licensed real estate broker. Equal Housing Opportunity.
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