NYC pied-à-terre tax: What condo and co-op owners need to know

What is the NYC pied-à-terre tax?

The NYC pied-à-terre tax is an annual surcharge on certain high-value residential properties that do not serve as a primary residence. It applies to qualifying one- to three-family homes, condominium units, and cooperative apartments in New York City. The tax was created through New York State’s 2026–2027 budget and is administered by the NYC Department of Finance.
 

When does the NYC pied-à-terre tax take effect?

The tax took effect on July 1, 2026. The first phase runs through June 30, 2028. A second phase, with different valuation rules and thresholds for condos and co-ops, begins July 1, 2028.

Under the current law, the surcharge is scheduled to remain in place through June 30, 2031, unless it is extended or changed (N.Y. Tax Law § 1350).
 

Which properties are subject to the pied-à-terre tax?

During the first phase, the NYC pied-à-terre tax generally applies to qualifying non-primary residences that meet these value thresholds:

• Covered one- to three-family homes with a Department of Finance market value of at least $5 million
   
• Covered condominium units with a phase-one market value of at least $1 million
   
• Covered co-op apartments with an imputed phase-one market value of at least $1 million

The property must also fall within the law’s definition of covered property and not qualify for an exclusion or primary-residence exemption.
 

Who is exempt from the NYC pied-à-terre tax?

The NYC pied-à-terre tax generally does not apply when the property is used as a primary residence by:

• The owner
   
• The owner’s spouse, child, sibling, parent, grandparent, or grandchild
   
• A tenant or permitted subtenant under a bona fide, arm’s-length lease lasting at least one year (learn more in our guide to NYC tenant rights)

The law also excludes certain properties that haven’t yet received a required certificate of occupancy and qualifying sponsor-owned condo or co-op units that have not yet been sold or transferred.
 

How do the 2026–2028 transitional rates work?

From July 1, 2026, through June 30, 2028, the transitional rates are:
 

For one- to three-family homes:

• $5 million to $15 million: 0.8%
   
• More than $15 million to $25 million: 1.05%
   
• More than $25 million: 1.3%

For condominiums and co-op apartments:

• $1 million to $3 million: 4%
   
• More than $3 million to $5 million: 5.25%
   
• More than $5 million: 6.5%

The condo and co-op rates are higher during this period because their existing Department of Finance values are generally lower than open-market sale values (N.Y. Tax Law §§ 1351(k)–(l) and N.Y. Tax Law § 1353(a)).
 

What changes beginning July 1, 2028?

Beginning July 1, 2028, the threshold rises to $5 million for covered Class 2 condos and co-ops. The rates then match those used for one- to three-family homes: 0.8%, 1.05%, and 1.3%.

For boards navigating this and other evolving New York City requirements, FirstService Residential’s in-house Compliance Department monitors regulatory updates, tracks important deadlines, and helps boards and owners address violations and other compliance matters.
 

Why are condos and co-ops treated differently at first?

New York City usually values Class 2 condos and co-ops by comparing them with rental buildings rather than recent sales of similar apartments. This often produces Department of Finance values below actual sale prices. The transitional NYC pied-à-terre tax rates attempt to account for that difference until the city uses the valuation method required for the second phase, which must consider comparable condo and co-op sales.
 

How will the tax affect condos vs. co-ops?

Condominium units are separate tax lots, so the Department of Finance can generally add the surcharge directly to the owner’s property tax bill. However, co-op buildings are usually assessed as one tax lot rather than as separate apartments. During phase one, the city calculates an apartment’s imputed value by multiplying the building’s market value by that unit’s share allocation. Learn more in our guide to condos vs. co-ops in NYC.
 

How is a co-op apartment’s value calculated?

During phase one, the value of a co-op apartment is generally based on the building’s Department of Finance market value and the percentage of total cooperative shares assigned to that apartment.

Beginning in phase two, the city is expected to value co-op apartments using comparable condo and co-op sales instead. The Department of Finance may issue more detailed guidance on this process. Learn more in our guide to understanding your co-op financials.
 

What documentation may owners need to provide for an exemption?

Owners may need records showing that the property qualifies as a primary residence or another exemption applies.

Helpful documents may include:

• The most recently filed federal or state tax return
   
• Driver’s license or other DMV-issued identification
   
• Voter identification card
   
• Other proof showing that the property is your primary residence

The Department of Finance has published guidance for the exemption process and may provide additional guidance as implementation continues.
 

How will owners learn that the tax applies?

The Department of Finance has begun sending owners initial determination letters stating that a property may be subject to the surcharge. The initial letter should include the surcharge amount and the deadline for responding.

Owners should review any notice promptly and speak with qualified tax or legal counsel when the information appears incorrect.
 

Can an owner challenge the tax?

Owners may be able to challenge the Department of Finance’s valuation or its decision that the property is not a primary residence. However, challenging the tax may be difficult because owners must follow specific procedures, meet strict deadlines, and provide documents supporting their claim. A disagreement with the amount alone may not be enough to change the city’s decision.

Deadlines and available grounds for review may be limited, so owners should not wait until the regular property tax payment date to seek advice. The proper process may depend on what part of the determination is being disputed.
 

Is the NYC pied-à-terre tax permanent?

The new Tax Law provisions are scheduled to expire on June 30, 2031. State lawmakers could extend, revise, or replace the surcharge before then. Owners and boards should follow future budget legislation and Department of Finance updates rather than assume the current structure will remain unchanged.
 

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This information is provided for general informational purposes only and is not intended to constitute, and should not be relied upon as, legal, regulatory, financial, or operational advice, or as a representation or guarantee of any specific services, capabilities, or outcomes. Property management needs, regulatory requirements, market conditions, and available services vary by jurisdiction, property type, and community. FirstService Residential provides services through locally based affiliates and associates, and services and results may vary by community, region, contractual terms, and applicable law.