A New York City condo the Department of Finance values at $1,000,000 owes roughly $40,000 a year under the new pied-a-terre surcharge, and one of the ways to zero that out depends entirely on a tenant who has no money at stake. Guidance circulating to Real Estate Board of New York members describes a Primary Residence Rider for use with the REBNY Residential Lease, written to close exactly that gap.
The surcharge was enacted on May 27, 2026 in the state budget and lives in the Tax Law as Article 30-C, sections 1350 through 1356. It applies to city fiscal years starting July 1, 2026 and sunsets on June 30, 2031 unless Albany renews it. I have spent the summer running this arithmetic for owners who kept a city apartment and rented it out, and the pattern is consistent: they believe they qualify for the lease exemption, and they have nothing in the file that proves it.
What the surcharge charges
Two things about the rate table surprise owners. The threshold is the Department of Finance valuation printed on the property tax bill, not what the unit would sell for, and the city values apartments on a rental-income method that runs well below sale prices. And nothing here is marginal. Once a property crosses a tier, the rate applies to the entire valuation.
| Property type | DOF valuation | Annual rate on full value |
|---|---|---|
| Condo or co-op unit | $1M to $3M | 4.00% |
| Condo or co-op unit | $3M to $5M | 5.25% |
| Condo or co-op unit | $5M and up | 6.50% |
| 1-3 family house | $5M to $15M | 0.80% |
| 1-3 family house | $15M to $25M | 1.05% |
| 1-3 family house | $25M and up | 1.30% |
A condo carried at exactly $1,000,000 of city valuation owes about $40,000 a year. A non-primary house valued at $20,000,000 owes 1.05% of the full $20,000,000, or $210,000 a year. Those are annual carrying costs, not a one-time closing item, and they sit on top of the mansion tax a buyer already pays at closing. The mansion tax guide covers that separate bracket math.
The lease exemption, in the statute's own terms
An owner is exempt when the property is the primary residence of the owner, of an immediate family member, of individuals collectively holding a majority interest in an owning entity, of the sole beneficiary of a trust, or of a tenant. That last path is the one this rider serves, and it carries four conditions that all have to hold at once.
- Natural persons. The lessee has to be an individual. A corporation, an LLC, a partnership, or a corporate housing account does not qualify, no matter who sleeps there.
- Primary residence. The tenant has to actually occupy the unit as their primary home, not keep it as a second address.
- A bona fide lease. The lease has to be a real, negotiated, arm's-length agreement. A family friend installed at a nominal rent fails this test even if the person genuinely lives there.
- A term of no less than one year. Seasonal lets, short-term arrangements, and month-to-month holdovers do not reach the threshold.
Read those four conditions together and the structural problem is obvious. Every one of them is a fact about the tenant, and the entire six-figure consequence lands on the owner. The tenant who quietly keeps their driver's license at a parent's address in New Jersey costs the owner the exemption and pays nothing for it.
What the Primary Residence Rider adds
The Primary Residence Rider attaches to the REBNY Residential Lease and does two jobs the base lease was never written to do. It obligates the tenant to produce documentation showing that they use the unit as their primary residence, and it obligates the tenant to indemnify the owner for losses arising from a failure to do so. The described version is signed by the tenant and notarized, a heavier execution standard than the lease itself, and that is the point: a sworn signature is evidence a tax authority can weigh. It can be presented at the start of a lease or at renewal, so an owner with a tenant already in place does not have to wait for a vacancy.
Where this description comes from, and how to confirm it
The rider is member-facing material, and REBNY's own public Second-Home Annual Tax page does not list it among the four resources it publishes there: a fact sheet, an FAQ, an owner assessment tool, and a link to the Department of Finance. Before you rely on the form, confirm the current version, its exact terms, and how to obtain it directly with REBNY. Everything in this article about the underlying exemption stands on the statute rather than on the form.
Do not confuse the rider with the Department of Finance's own Non-Primary Residence Surcharge Tenant or Subtenant Affidavit. That affidavit is a city form, it is sworn before a notary, and per the city's instructions it is the path for a tenancy with no written lease. Where a written lease exists, the city asks for the lease itself plus a supporting document such as a utility bill. A private lease rider does not replace either.
The deadline that is already running
The Department of Finance mailed notices on July 22, 2026 to owners whose records did not establish a primary residence, and the response deadline for notice recipients is September 18, 2026. A bona fide long-term lease is one of the proofs the city accepts. The first charge appears on the property tax bill due January 1, 2027. If you got a notice, the rider is useful going forward, but it does not replace the filing that is due next month.
Where the rider does not save you
A rider documents a fact. It cannot manufacture one. The exemption still fails if the unit is listed for rent and sitting empty, if the lease runs shorter than twelve months, if the tenant is an entity rather than a person, or if the rent is so far below market that the agreement is not arm's length. I have watched owners talk themselves into all four, and the pattern is the same each time: they are describing an intention rather than a signed, dated, market-rate lease with someone living in the apartment.
One more caution belongs in every conversation about this document. The rider is a lease term, not a tenant-selection tool. Apply it to every applicant on the same terms, ask for residence documentation rather than anything touching a protected characteristic, and keep the request limited to what the exemption actually needs: a tax return showing the address as a permanent home, a driver's license, a voter registration, a utility bill. New York City's Human Rights Law protects tenants on grounds including immigration status and lawful source of income, and a documentation clause is not a license to go past what the tax rule asks for.
What this changes for owners, buyers, and sellers
For an owner already renting a covered unit, the rider is the cheapest piece of the compliance file and the one most likely to be missing. For a buyer weighing a second home in the city, the surcharge is now a fixed annual line next to common charges and property tax, and the rental path is the only exemption that a non-resident buyer can create on purpose. For a seller of a covered unit, every future non-resident bidder underwrites that annual number before making an offer, which shows up in price rather than in conversation. The pied-a-terre buying guide covers how the surcharge fits a second-home purchase from the start, and the notice and deadline breakdown covers the filing itself.
See whether your unit is exempt and what it would owe
Run the Exemption CheckAlready know the surcharge reaches you? The sell or lease calculator prices the three options side by side: keep paying it, lease to a qualifying tenant, or sell and net out.
Renting out a unit the surcharge reaches?
Send me the address. I will read the valuation off the bill, tell you which exemption path fits, and walk through what the lease file needs to look like before January.
Ask MiltonThis is planning context, not legal or tax advice. Eligibility for the exemption turns on the facts of each transaction and on Department of Finance requirements, and the rider is a REBNY form whose terms REBNY controls. Confirm your own position with a New York real estate attorney or your CPA, and confirm the current form and its availability with REBNY, before you rely on any of this. Rates, thresholds, and dates cited come from the New York Tax Law and the Department of Finance rules as of August 2026 and can change.
Sources
Primary sources for the figures on this page, verified August 21, 2026.
- NYC Department of Finance, non-primary residence surcharge, the filing rules and the September 18 deadline
- New York Tax Law Article 30-C, sections 1350 to 1356, the statute, its rates and thresholds, and the 2031 sunset
