Quick Guide to the New York City Pied-à-Terre Surcharge for Co-op and Condominium Owners
New York City has introduced a temporary five-year annual surcharge on non-primary residence co-operatives and condominiums valued above certain thresholds. The surcharge will be applicable from 1 July 2026 to 30 June 2031 and will be reflected directly on the owner’s New York City property tax bill.
Two Phases with Different Valuation Methods
Phase One (2026–2028)
The valuation in the beginning will utilise the Department of Finance (DOF) assessed market value, which may be lower than the actual market value.
Non-primary residences valued at $1 million or more will be fully subject to the surcharge:
| • | 4% on properties valued between $1 million and $3 million |
| • | 5.25% on properties valued between $3 million and $5 million |
| • | 6.5% on properties valued above $5 million |
Phase Two (2028–2031)
Valuations will switch to comparable market sales, with higher thresholds and lower rates.
Non-primary residences valued at $5 million or more will be fully subject to:
| • | 0.8% on properties valued between $5 million and $15 million |
| • | 1.05% on properties valued between $15 million and $25 million |
| • | 1.3% on properties valued above $25 million |
Primary Residence Exemption
A property is exempt if it was used as the owner’s primary residence as of 5 January prior to the relevant fiscal year. The DOF will review tax records and may consider occupancy patterns.
The exemption applies if the property is occupied by:
| • | The owner |
| • | An immediate family member |
| • | A tenant under a bona fide lease of one year or more |
| • | Majority owners of an entity |
| • | A sole trust beneficiary |
Generally, non-UK residents will not qualify, as meeting the residence criteria may trigger US tax residency under the substantial presence rules.
Ownership Structures and Eligibility
Multi-tier ownership arrangements (e.g., LLC-owned LLCs, trust-owned LLCs) currently do not qualify for the primary residence exemption, even if the individual resides in the unit.
Non-UK owners utilising corporate structures for US estate tax purposes may need to reassess their eligibility for exemption.
DOF Notices and Required Actions
The Department of Finance has issued notices to all properties with assessed values of $1 million or more, including co-operatives (via boards or managing agents). Some owners have challenged these notices in court, though the legislation itself remains unchallenged.
Important Deadlines
| • | Application for primary residence exemption: 18 September 2026 |
| • | First surcharge payment: 1 January 2027 |
Owners are required to upload supporting documentation, such as tax returns, leases, utility bills, entity agreements, or trust affidavits. Valuation disputes must be filed with the New York City Tax Commission.
Officials anticipate that fewer than 12,000 properties will ultimately be subject to the surcharge, generating approximately $350 million annually. The funds are intended to support public initiatives including enhanced safety, cleaner parks, and free bus services. Other jurisdictions are also considering implementing similar higher-occupancy surcharges on second homes.