Price your three options
Nothing here is emailed anywhere. The numbers stay on this page. The one figure people get wrong is the first one: the threshold is the Department of Finance valuation printed on your property tax bill, not what the unit would sell for.
Your annual cash position
| Per year | Keep paying it | Lease it out |
|---|---|---|
| Pied-a-terre surcharge | ||
| Carrying cost | ||
| Rent collected | ||
| Net per year | ||
| Across the two-year Phase 1 window |
If you sell instead
| Sale price | |
| Broker commission | |
| NYC real property transfer tax | |
| New York State transfer tax | |
| Attorney and other closing costs | |
| Net proceeds |
The mansion tax is not on this list on purpose. It is paid by the buyer at closing, so it never comes out of a seller's proceeds. It does reach your buyer at $1,000,000 and above, which is a different problem: it is part of what they are pricing when they bid.
What the arithmetic says
Estimates only. This is not tax, legal, or investment advice, and nothing here is a prediction, a guarantee of any outcome, or a valuation of your property. Rates, thresholds and dates come from New York Tax Law Article 30-C and Department of Finance rules as of August 2026 and can change, and Phase 2 rests on a system the city has not finalized. Your surcharge depends on the valuation the Department carries for the property and on how the exemption applies to your ownership structure. Your flip tax, your building's rules on leasing, and your closing costs vary. Confirm your own position with a New York real estate attorney and your accountant before acting. Milton Coste, Licensed Real Estate Associate Broker, is not a tax adviser.
Why this is a two-year question for a condo or a co-op
The Phase 1 schedule runs from July 1, 2026 to June 30, 2028, which is two city fiscal years. On July 1, 2028 condos and co-ops are scheduled to move to the same $5,000,000 threshold and the same 0.8, 1.05 and 1.3 percent bands that 1-3 family homes use today, under a new Department of Finance assessed-value system. The whole surcharge then sunsets on June 30, 2031 unless Albany renews it.
That reframes the decision. A condo owner staring at a 4 percent charge on a $1,200,000 valuation is looking at two years of it on the current schedule, not a permanent line item, and the new system that governs afterward has not been finalized. The calculator prints the two-year total for exactly that reason. Selling a property to escape a charge that is scheduled to change in twenty-four months is a decision worth making with the two-year figure in front of you rather than the annual one.
None of that is a reason to skip the filing. The exemption is claimed against the year in front of you, and the first charges land on the property tax bill due January 1, 2027.
What the lease path actually requires
An owner is exempt when the property is the primary residence of the owner, an immediate family member, individuals collectively holding a majority interest in an owning entity, the sole beneficiary of a trust, or a tenant. The tenant path is the only one an owner who lives elsewhere can create on purpose, and it carries four conditions that all have to hold at once.
- A natural person. 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.
- Actual primary residence. The tenant has to live there as their primary home, not keep it as a second address.
- A bona fide lease. Real, negotiated, arm's length. A friend installed at a nominal rent fails this even if they genuinely live there, which is why the calculator asks for market rent rather than whatever you would charge someone you know.
- A term of no less than one year. Seasonal lets, short-term arrangements and month-to-month holdovers do not reach it.
Every one of those four is a fact about the tenant, and the entire consequence lands on the owner. That asymmetry is what the REBNY Primary Residence Rider is written to address: it obligates the tenant to produce documentation and to indemnify the owner, and the described version is signed and notarized. Confirm the current form and its terms with REBNY before relying on it. The rider explainer covers it in full.
One rule that is not optional
A residence-documentation clause is a lease term, not a tenant-selection tool. Apply it to every applicant on identical terms and keep the request limited to what the exemption 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 tax exemption is not a licence to ask past what the tax rule asks for.
Before you assume you can lease it
The tax rule and your building's rule are two different gates and you need both. A co-op almost always requires board approval to sublet, many buildings cap how many years out of a given period a shareholder may sublet, and some charge a sublet fee that comes straight off the top of the rent in the calculator above. A condominium board generally cannot stop a lease outright but often holds a right of first refusal and its own minimum-term and application rules. Read your proprietary lease or your by-laws and house rules before you price the lease column as if it were available to you.
If the building says no, the choice collapses from three options to two, which is a different decision and usually a faster one.
What a sale actually costs, and what it does not
The seller pays the broker commission, the New York City real property transfer tax at 1 percent up to $500,000 and 1.425 percent above it, the New York State transfer tax at 0.4 percent rising to 0.65 percent at $3,000,000 and above inside the five boroughs, a co-op flip tax if the building charges one, and the attorney and closing items. The mansion tax is not a seller cost. It is paid by the buyer at closing on any residential purchase at $1,000,000 or more.
It still matters to you, though, because your buyer is pricing it, and now they are pricing the surcharge too. Any non-resident bidder on a covered unit is underwriting an annual number that did not exist before July 2026, and that shows up in the offer rather than in the conversation. That is the part of a sale the calculator cannot compute for you, and it is the reason the sell column deserves a comparative market analysis rather than a guess at the price.
You can run the full seller sheet, including your mortgage payoff, on the net proceeds calculator, and the buyer side of the closing table on the mansion tax calculator.
Common questions
Does renting out my NYC apartment remove the pied-a-terre tax?
It can, but only where four conditions hold at once: the lessee is an individual rather than an entity, that person actually uses the unit as their primary residence, the lease is bona fide and arm's length rather than a nominal-rent arrangement, and the term is no less than one year. A unit listed for rent and sitting empty does not qualify, because the exemption turns on somebody living there.
Is it cheaper to sell or to lease a covered pied-a-terre?
It depends on three numbers the calculator on this page asks for: the annual surcharge at your Department of Finance valuation, the gap between market rent and your carrying cost, and your net sale proceeds after commission, transfer taxes and any co-op flip tax. Leasing is worth the rent plus the surcharge it erases, which is more than the rent alone. Selling is the only option that ends the exposure permanently, and it also ends the ownership.
Does the seller pay the mansion tax?
No. The mansion tax is a buyer tax, paid at closing on any New York City residential purchase at $1,000,000 or more, at rates from 1.00 percent to 3.90 percent applied to the entire price. A seller pays the broker commission, the city and state transfer taxes, any co-op flip tax, and the attorney and closing items.
How long does the pied-a-terre surcharge last?
The surcharge applies to city fiscal years starting July 1, 2026 and sunsets on June 30, 2031 unless Albany renews it. The Phase 1 rate schedule, which puts condos and co-ops in 4.00 to 6.50 percent bands from a $1,000,000 valuation, runs only to June 30, 2028. On July 1, 2028 condos and co-ops are scheduled to move to a $5,000,000 threshold and the lower 0.8 to 1.3 percent schedule under a Department of Finance assessed-value system that has not been finalized, so treat Phase 2 as scheduled rather than settled.
Can my co-op board stop me from leasing to claim the exemption?
It can stop the sublet, which has the same effect. Most co-ops require board approval to sublet, many cap the number of years a shareholder may sublet within a given period, and some charge a sublet fee that reduces the rent the exemption path earns you. A condominium board generally cannot block a lease outright but often holds a right of first refusal and sets its own minimum-term rules. Check your proprietary lease or by-laws before counting on the lease column.
Want the sale number priced properly?
The sale column above is only as good as the price you typed into it. A comparative market analysis replaces that guess with the recent comparable sales in your line.
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