On July 1, 2026, New York City starts charging roughly 13,000 second-home owners a brand-new yearly tax, and the first bills arrive January 1, 2027. It is the pied-à-terre tax, and on the priciest condos and co-ops it runs as high as 6.5% of the city's value, every year. I have spent 25+ years closing deals across four boroughs, and I have tracked this one since the budget fight in Albany. Here is who actually pays, how much, and why it can cost you even if you live here full-time.
A pied-à-terre, French for "foot on the ground," is a home you keep for part-time use while your real life, and your income taxes, sit somewhere else. Albany had floated a tax on these part-time homes since 2014 and stalled every time, until now. The legislature passed it in late May 2026 as part of the 2026-2027 state budget, and Governor Hochul signed it on May 28. The official name is a mouthful, the "City Surcharge on Property That Does Not Serve as a Primary Residence," now written into the tax law as Article 30-C. Almost everyone, me included, just calls it the pied-a-terre tax.
The one-minute version
This is an annual surcharge, not a one-time closing cost, and that is the part that trips people up. The mansion tax you pay once, at the closing table. The pied-à-terre tax comes back every year for as long as you own a covered home that is not your primary residence. It took effect for city fiscal years starting July 1, 2026, and it is written to expire June 30, 2031, unless Albany renews it. Tax laws rarely sunset on schedule, so I would plan as if it is here to stay.
The state projects about $500 million a year from the tax. The City Comptroller's office puts the realistic figure closer to $350 million once owners adjust. Either way, the money is earmarked to keep city services running.
Who actually pays, and who is safe
The trigger is easy to state and tricky to apply: you owe the tax if you own a covered NYC home that is not a primary residence, and your own primary residence sits somewhere that does not pay NYC income tax. If you live in the city full-time, you are not the target, even if you own several homes here, because you already pay city income tax.
Who gets a bill
- • Out-of-state owners (Florida, Connecticut, New Jersey) with an NYC home
- • New Yorkers who live in the state but outside the five boroughs (Westchester, Long Island, the Hudson Valley) and keep an NYC home they do not live in
- • Owners holding through an LLC, partnership, corporation, or trust
Who is exempt
- • Full-time NYC residents, even with multiple NYC homes
- • A home lived in by the owner's spouse, child, sibling, parent, grandparent, or grandchild
- • A home rented to a real tenant on a genuine lease of at least one year
Holding the apartment in an LLC or a trust does not get you out of it. The law looks through to the person behind the entity: the majority member, partner, or shareholder, or the sole beneficiary of a trust, is treated as the owner. There is one open question the lawyers are still chewing on, whether an entity that owns another entity that owns the home gets caught, so if your ownership is layered, that is a question for your attorney.
One more wrinkle worth a call to your tax advisor: the test keys off the property, not your income-tax residency. Someone who spends more than 183 days a year in the city but is domiciled elsewhere could still get a bill, because the apartment still is not their primary home.
What the exemption really means
The family carve-out is narrower than people hope. The law lists exactly six relatives: spouse, child, sibling, parent, grandparent, grandchild. A $6 million condo your daughter lives in full-time is exempt. The same condo sitting dark except for your few weekends in town is not. The one-year-lease exemption has to be a real, arm's-length lease to an actual person, not a paper arrangement.
Some property is outside the tax no matter who owns it: ordinary rental apartment buildings, commercial property, hotels, vacant land, new construction that does not yet have its certificate of occupancy, unsold sponsor units in a building still under its offering plan, and any condo that bundles more than three units under one owner.
How much it costs right now
The rates depend on whether you own a house or an apartment, and they look very different. This is the Phase 1 schedule, in effect from July 1, 2026 through June 30, 2028.
| Property type | City value | Annual rate |
|---|---|---|
| House (1-3 family) | $5M-$15M | 0.8% |
| House (1-3 family) | $15M-$25M | 1.05% |
| House (1-3 family) | Over $25M | 1.3% |
| Condo or co-op | $1M-$3M | 4% |
| Condo or co-op | $3M-$5M | 5.25% |
| Condo or co-op | Over $5M | 6.5% |
Two things jump out: the apartment rates are far higher, and the apartment threshold is far lower. That is not a mistake. New York City assesses condos and co-ops at a small slice of what they actually sell for, often 5% to 20% of true value. So the city's "$1 million value" on a condo can stand in for a real sale price around $5 million. The Governor's office used that exact comparison. The higher rates make up for the artificially low values. If you want the background on how the city values apartments, my NYC property tax guide walks through it.
What the bill actually looks like
A Florida resident owns a Manhattan condo the Department of Finance values at $1.5 million, which can mean a sale price north of $7 million in a trophy building, and keeps it as a second home. The bill: 4% of $1.5 million, or $60,000 a year, every year she owns it. A non-resident who owns an $8 million townhouse pays 0.8% of $8 million, or $64,000 a year.
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Phase 2 in 2028 is the unsettled part
Starting July 1, 2028, the math is supposed to change. The threshold rises to $5 million of true market value for every property type, and the city is meant to switch to valuing condos and co-ops on actual comparable sales instead of its current formula. When that happens, the headline apartment rates come down, because they would finally apply to full market value rather than a fraction of it.
Here is the catch, and it is a big one. Phase 2 depends on the city building a sales-based valuation system it has tried and failed to build for roughly 30 years. The law does not even say what happens if the Department of Finance is not ready by mid-2028. Treat Phase 2 as scheduled but genuinely up in the air. Anyone quoting you precise 2028 numbers today is guessing.
Selling a high-value condo, co-op, or townhouse?
The second-home buyer pool just changed. I will price your home to the market that exists now, not last year's. 25+ years, four boroughs, RLS member.
Get a Pricing StrategyThe deadline, and how the city decides
For the first year, the Department of Finance has to mail a notice to every owner it flags as non-primary by August 30, 2026. It measures your status as of January 5 before the fiscal year. Residency is self-certified, so if the city flags you and you disagree, you push back with proof.
What counts as proof: a prior-year New York State resident income tax return listing the home as your permanent address, a STAR exemption on the property, the homeowner tax rebate credit, or evidence that a qualifying tenant or family member uses it as their primary home.
Keep your records
The city can audit a primary-residence claim for up to six years. A false claim made carelessly or in bad faith carries a penalty of up to 50% of the surcharge on top of the tax, after notice and a hearing. The Department of Finance is still writing the detailed rules, so some of how it decides primary residence may shift before the first bills go out.
Why it matters even if you live here full-time
Here is the part the legal alerts skip, and the part I care about as a broker. This tax does not only hit today's out-of-town owners. It quietly lowers the resale value of every home above the threshold, including yours, even if you live in it full-time.
Think about who buys a $6 million condo or a $5 million-plus townhouse. A large share of that buyer pool wants a New York foothold, not a primary home. Starting now, every one of those buyers has to underwrite a 4% to 6.5% annual surcharge before they bid. So they bid less, or they walk. Your buyer pool shrinks and your price takes a haircut, and you never owed a dollar of the tax yourself. Over 25+ years I have watched luxury-tax changes get priced straight into offers, and this one is steep enough to move real numbers.
Co-ops feel it from another direction. Boards that already screen hard on part-time use now have shareholders staring at a five-figure annual bill, which can soften values across a building. If you are weighing a sale, the full picture of NYC real estate taxes is worth a read before you set a number.
Can you deduct it? Almost certainly not
Do not assume this is a write-off. New York State does not let you deduct state and local property taxes on your state return, and the federal SALT deduction is capped. On top of that, this charge is likely to be treated as a surcharge rather than an ordinary, deductible property tax. The practical result for most owners is a fully out-of-pocket cost with little or no tax benefit. If you have been modeling it as deductible, you are probably overstating your cushion. Run it past your own tax advisor before you count on a deduction, the same way you would for capital gains when you sell.
What to do now
- • If you own a covered NYC home you do not live in, expect a notice by late August 2026 and budget for the first bill on January 1, 2027.
- • Gather your primary-residence proof now if you think the city has you flagged wrong.
- • If you hold the home in an LLC or trust, ask your attorney how the look-through rule applies to you.
- • If you are selling a high-value condo, co-op, or townhouse, price in the smaller second-home buyer pool from day one.
- • If you are buying a place you will not live in, add this annual surcharge to your carrying costs, next to the one-time transfer tax and mansion tax. The same goes if you are weighing a pied-à-terre purchase in the first place.
Not sure whether this tax hits your apartment?
Ask MiltonFrequently asked questions
Who pays the NYC pied-à-terre tax?
Owners of an NYC home that is not their primary residence, when their main home is somewhere that does not pay NYC income tax. Full-time city residents are exempt, even with multiple NYC homes. Out-of-state owners and New Yorkers who live outside the five boroughs are the main targets.
How much is it?
In Phase 1, through June 2028, houses valued at $5 million or more pay 0.8% to 1.3% a year. Condos and co-ops valued at $1 million or more by the city pay 4% to 6.5% a year. The apartment rates are higher because the city values apartments far below their sale price.
When does it start?
It applies to city fiscal years beginning July 1, 2026. The Department of Finance mails its first non-primary notices by August 30, 2026, and the first bill is due January 1, 2027. The law expires June 30, 2031 unless renewed.
Does renting it out avoid the tax?
Yes, if it is a genuine lease of at least one year to a real person at arm's length. A home lived in full-time by the owner's spouse, child, sibling, parent, grandparent, or grandchild is also exempt.
Is the pied-à-terre tax tax-deductible?
Almost certainly not. New York State does not allow a state-return deduction for it, the federal SALT cap limits any federal benefit, and it is likely treated as a surcharge rather than a creditable property tax. For most owners it is a fully out-of-pocket cost. Confirm with your tax advisor.
