What is the Pied-a-Terre tax?
The Pied-a-Terre tax is a new tax on high-value secondary residences that is expected to take effect in mid-2026. Mayor Johan Mamdani has said that the revenue will be used to help close the closure of the city's budget deficit and to help fund affordable housing initiatives. However, some fiscal estimates published by the New York City Comptroller's office show that revenue could be reduced to $340-$380 million following exclusions from real estate lobbying and changes that the tax bill has gone through.
The Pied-a-Terre tax has two phases.
In phase 1, which lasts from July 1, 2026 to June 30th, 2028:
Condos and Co-ops with a Department of Finance assessed value of $1 million or more are affected:
- $1 million to $3 million: 4% surcharge
- $3 million to $5 million: 5.25% surcharge
- Over $5 million: 6.5% surcharge
1-, 2-, and 3-Family Homes with a Department of Finance assessed value of $5 million or more are affected:
- $5 million to $15 million: 0.8% surcharge
- $15 million to $25 million: 1.05% surcharge
- Over $25 million: 1.3% surcharge
In Phase 2, beginning July 1, 2028, all property types (condos, co-ops, 1-3 family homes) above a $5 million market value are subject to the surcharge.
Tax rates shift to a flat rate for all properties:
- $5 million to $15 million: 0.8%
- $15 million to $25 million: 1.05%
- Over $25 million: 1.3%
The following charts show the surcharge amounts for the tax in the planned phases:
| Phase 1 (July 1, 2026 – June 30, 2028) | DOF Assessed Value | Annual Surcharge |
|---|---|---|
| Condos & Co-ops | $1 million – $3 million | 4.0% |
| $3 million – $5 million | 5.25% | |
| Over $5 million | 6.5% | |
| 1-, 2-, and 3 Family Homes | $5 million – $15 million | 0.8% |
| $15 million – $25 million | 1.05% | |
| Over $25 million | 1.3% |
| Phase 2 (Beginning July 1, 2028) | Market Value | Annual Surcharge |
|---|---|---|
| All Residential Property Types | $5 million – $15 million | 0.8% |
| $15 million – $25 million | 1.05% | |
| Over $25 million | 1.3% |
Who could be affected by the Pied-a-Terre tax? Who is exempt?
Anyone who owns a secondary residential property that has an assessed value of greater than $1 million (for condos and co-ops) or $5 million (for 1-, 2-, 3-family homes) could be subject to the Pied-a-Terre tax. The property owners who are subject to this tax are also likely to be luxury second homeowners, out-of-state property holders, international property holders, and entity trusts and holding companies that hold qualifying non-primary residential real estate. In July 2026, the Department of Finance sent out notices to property owners believed to be subject to the tax, based on addresses that appear on the fiscal year 2027 final property assessment data roll. Although the roll included all properties that were potentially owed, not all of them are ultimately subject to the surcharge, as they may in fact be primary residences.
There are owners of high-value residential properties who are exempt from this tax. Homeowners are exempt from the tax if the home serves as the primary residence for any of the following persons:
- The owner of the property
- A tenant or subtenant
- One or more individuals who collectively hold a majority interest in the LLC, corporation, or partnership that owns the property
- An immediate family member of the owner or majority interest holder
- The sole beneficiary of a trust
Homeowners who received a notice from the Department of Finance and believe their property is a primary residence can file an exemption application to remove the property from the Pied-a-Terre tax by the extended deadline of September 18, 2026.
How do I apply for an exemption from the Pied-a-Terre tax?
If the property is truly used as a primary residence, the homeowner can apply for an exemption from the surcharge by submitting documents to the Department of Finance to prove that it is used as a primary residence. The specific documents the homeowner must submit for the exemption application depend on who is using the property as a primary residence.
For every exemption application, the owner must provide:
- The most recently filed federal or state tax return
- Driver's license or other DMV-issued ID
If a tax return, driver's license, or other DMV-issued ID is not available, the owner must provide:
- Voter ID card
- Other proof of primary residence
These documents must be submitted for every occupant who is identified as using the property as a primary residence.
If the property is the primary residence of a tenant or subtenant, the owner must also submit:
- A copy of the current lease and one additional rental document, such as a utility bill, proof of rent payment, or renter's insurance policy, OR
- A Tenant or Subtenant Affidavit and two additional identical documents
If the property is the primary residence of an immediate family member of the owner or majority interest holder, the owner must also submit documents to prove the family relationship, such as:
- A birth certificate
- A marriage certificate
- An Immediate Family Member Affidavits Form
If the property is owned by a business entity (such as an LLC, corporation, trust, or partnership) and is used as a primary residence by a majority shareholder, member, or partner, the owner must also submit:
- A partnership agreement, trust agreement or affidavit, LLC operating agreement, or articles of incorporation
- A Majority Interest Affidavit
If the owner believes that the Department of Finance has incorrectly valued the property, the homeowner can file a challenge to the property's value with the Tax Commission. The owner can also ask the Tax Commission to review if the property qualifies as a primary residence and is exempt from the Pied-a-Terre tax, but applying for a primary residency review from the Tax Commission will void the exemption application from the Department of Finance, and the owner can only apply for a review or exemption regarding primary residency from one agency.
There are heavy penalties for falsely reporting an exemption for a property that is subject to the Pied-a-Terre tax.
Privacy concerns of Pied-a-Terre tax
When the Pied-a-Terre tax was announced to be put into effect, the Department of Finance quickly followed by publishing the list of names and addresses of property owners who would be subject to the tax as part of the 2027 property assessment roll. This raised many privacy concerns among homeowners, especially since many of the published properties were held among homeowners on the Department of Finance government website, as their personal information was made readily available online to be viewed by anyone once the properties were added to the roll for those subject to the Pied-a-Terre tax in the first place because they were being used as primary residences.
The most effective way homeowners can protect their personal information from being published in the property assessment roll is by putting their property into a trust or LLC. When the property is placed into a trust or LLC, although the address is still published, the name of the individual owner is not revealed; instead, the name of the trust or LLC is shown in place of the name of the individual owner. The added privacy is just one of the many benefits of putting the property into a trust or LLC for asset and estate protection.
Advantages of estate planning in light of the new Pied-a-Terre tax
The new Pied-a-Terre tax brings up estate planning issues that need to be considered by homeowners. These considerations include:
Carrying costs associated with the property, which significantly increases for high-value secondary residential properties because of the Pied-a-Terre tax
Liquidity of the property, which is reduced as prospective buyers can be discouraged because of the Pied-a-Terre tax
Inheritance planning and family succession, which do not immediately shield the property from claims to a primary residence
It is important to note that the DOF assessment roll will generally list the LLC or trust name as the owner of record, rather than putting the owner's personal name. This maintains a level of privacy for the homeowner, in that anyone considering public information about high-value properties will not immediately see the individual's name.
The Pied-a-Terre tax directly impacts how families should be thinking about estate and inheritance planning. Properties intended to remain in the family should be structured so that a beneficiary uses the property as a primary residence. Likewise, passing down property owned by an LLC or corporation faces the tax unless majority interest holders or family members use it as a primary residence.
Additionally, after death, whoever inherits a qualifying property may still face the tax if there is no one living there as a primary residence or leasing it out. Thus, families with real estate holdings should be making preparations, making sure beneficiaries use the property as a primary residence, or even considering liquidating those properties.
If you own a second home in New York, now is a good time to review your estate plan while circumstances are still changing rapidly. Additionally, if you have any questions regarding the Pied-a-Terre tax and how it may affect your financial and asset planning matters, please contact the Law Office of Inna Fershteyn at (718) 333-2394.
Frequently Asked Questions
Why did I receive a letter from the Department of Finance that my property may be subject to the Pied-a-Terre tax when I use it as a primary residence?
The Department of Finance sent letters to owners of properties that may be subject to this tax based on property assessment data. Some owners were sent letters even when the property was used as a primary residence because the Department of Finance was unable to confirm that the property was used as a primary residence, so the homeowner may file an exemption application to prove that the property is exempt.
When will the Pied-a-Terre tax show up on my tax bill?
Because the Pied-a-Terre tax went into effect on July 1, 2026, taxes for condos and co-ops will show up on November 2026 and will be applied during the January 1, 2027. Taxes for 1-, 2-, and 3-family homes will be applied during the 2027-2028 tax cycle.
What are the penalties for filing an inaccurate or misleading primary residence exemption application for the Pied-a-Terre tax?
The penalties for filing incorrect or misleading information to claim a primary residence exemption from the tax are steep. An owner can face a penalty equal to 50% of the applicable surcharge amount for avoiding the surcharge through misleading or inaccurate information in the application, wrongfully results in a lower tax calculation, or 300% of the tax shortfall, whichever is less, in addition to 100% of the surcharge that should have been applied on top of the taxes owed.
When is the Pied-a-Terre tax exemption application due?
The surcharge exemption application was originally due on August 24, 2026 for owners to file this exemption. NYC extended the deadline for this surcharge to September 18th, 2026. Thus, if you are applying for an exemption, you should apply and submit your documents by September 18th, 2026.
Inna Fershteyn, Esq.
Principal Attorney - Estate planning, elder care & Medicaid planning
J.D., Benjamin N. Cardozo School of Law — cum laude, Order of the Coif
B.M., New York University — magna cum laude
20+ years of practice - Licensed in New York and New Jersey
2026 NY Metro Super Lawyers, NY State Certified Mentor
Inna has practiced estate planning and elder law for over 20 years, focusing on estate planning, Medicaid planning, asset protection, and trust and estate planning matters for families across Brooklyn, New York and the NY area. She leads the Law Office of Inna Fershteyn and Associates, P.C., and speaks English, Russian, and Ukrainian.
Sources:
- https://www.nyc.gov/site/finance/property/property-pied-a-terre-tax.page
- https://comptroller.nyc.gov/reports/
- https://www.nytimes.com/2026/07/mayor-mamdani-real-estate-tax-revenue
- https://www.nyc.gov/site/finance/property/property-primary-residence-exemption.page
- https://www.nyc.gov/site/finance/property/property-tax-commission.page