New York City has implemented a new Non-Primary Residence Surcharge, commonly known as the “pied-à-terre tax,” on certain high-value residences that are not used as a qualifying primary residence. If you own a condominium, cooperative apartment, townhouse, or other New York City property that is not your principal home, it is important to understand how the surcharge works and whether an exemption may apply.
What Is a Pied-à-Terre?
Pied-à-terre is a French term meaning “foot on the ground” and is commonly used to describe a second home used periodically rather than as a primary residence. The surcharge was enacted to target high-value New York City residences that are not being used as a primary residence, regardless of who owns it.
Beginning Date for Annual Tax
The Non-Primary Residence Surcharge was enacted by the New York State Legislature as part of the FY 2026-2027 budget legislation and became effective beginning July 1, 2026. The law is currently scheduled to remain in effect through June 30, 2031.
This is an annual tax, not a one-time charge. If a property remains subject to the surcharge, the tax is imposed each year and is collected through the property tax system. The surcharge is added to the property’s statement of account and paid in the same manner as property taxes.
The first notices have already been mailed to owners whose properties may be subject to the surcharge.
Which Properties May Be Affected?
The surcharge may apply to condominium units, cooperative apartments, and one-, two-, and three-family homes.
For tax years 2026-2027 and 2027-2028:
- Condominiums and co-ops generally become subject to review if the Department of Finance market value is at least $1 million.
- One-, two-, and three-family homes generally become subject to review if the Department of Finance market value exceeds $5 million.
However, reaching those value thresholds does not automatically mean the surcharge applies. The next question is whether one of the law’s exemptions is available.
How Much Is the Tax?
For condominiums and cooperative apartments, the annual surcharge rates during the initial phase of the law are generally:
| Condos and Coops DOF Market Value | Annual Surcharge Rate |
| $1 million to under $3 million | 4.0% |
| $3 million to under $5 million | 5.25% |
| $5 million and above | 6.5% |
For covered one-, two-, and three-family homes, surcharge rates generally range from approximately 0.8% to 1.3%, depending on value.
The applicable rate is generally applied to the Department of Finance market value assigned to the property, rather than current market sale prices. As a result, the actual impact may differ significantly from what owners expect.
The Most Important Question: Does an Exemption Apply?
The surcharge was designed to target certain high-value non-primary residences. As a result, the law contains several important exemptions. For many private clients, determining whether an exemption applies will be more important than calculating the tax itself.
Exemption #1: The Property Is the Owner’s Primary Residence
The surcharge does not apply if the property serves as the primary residence of at least one covered owner. In practical terms, the law is aimed at second homes, not the residence where an owner actually lives full-time.
Exemption #2: The Property Is the Primary Residence of Certain Family Members
The law also provides an exemption if the property is the primary residence of certain immediate family members of the owner or majority owner. Eligible family members include spouse, children, parents, grandparents, grandchildren or siblings.
This exemption may be particularly important for families who own apartments occupied by a child attending school in New York City, an adult child beginning a career, or an aging parent who resides in the city.
Exemption #3: The Property Is Leased to a Long-Term Tenant
The surcharge also does not apply to certain properties rented to a New York City resident under a bona fide, arm’s-length lease with a term of at least one year. This exemption is particularly important for owners of investment properties. A condominium occupied by a qualifying long-term tenant may be exempt even though the owner lives elsewhere.
What Documentation Will NYC Review?
The Department of Finance has made clear that receiving a notice does not necessarily mean a property owes the surcharge. Instead, owners claiming an exemption must generally submit an application and supporting documentation on New York City Department of Finance Non-Primary Residence Surcharge website.
For a Primary Residence Exemption
The City may review documents such New York income tax returns, driver’s licenses or government-issued identification, voter registration records, utility bills, or other evidence establishing that the property is the owner’s primary residence.
For a Family-Member Exemption
Owners should be prepared to provide documentation establishing the family relationship, documents showing the family member occupies the property, and evidence that the property serves as the family member’s primary residence.
For a Rental Exemption
Owners may need to provide a copy of the current lease, proof of rent payments, tenant occupancy documents, utility bills, renter’s insurance, or similar supporting records. The focus is generally whether the property genuinely serves as a long-term residence for a tenant under a qualifying lease arrangement.
What About Properties Owned by a Trust or Business Entity?
Many of our clients own New York City residences through revocable trusts, corporations, or LLCs. The law specifically addresses trust or business ownership and provides that how title is held is irrelevant to determining if the property is subject to the tax. The city will look through the trust or business structure to determine whether the surcharge applies.
The analysis remains focused on who benefits from the property, who occupies it, and whether one of the statutory exemptions applies. That makes this an excellent time to review trust-owned real estate as part of your broader estate plan.
What Should Owners Do Now?
If you own a New York City residence that is not your primary home, you should review how the property is actually being used to determine whether one of the statutory exemptions may apply and gather supporting documentation. Owners should pay close attention to any Department of Finance correspondence to timely provide required documentation supporting your exemption request.
As the rules are implemented, families should review and consider their ownership and occupancy arrangements to ensure they remain consistent with both their long-term estate planning goals and the new requirements.
Talk with an Experienced Estate Planning Attorney
If you received a letter from New York City indicating that you may be subject to the tax, legal guidance may be beneficial. An experienced estate planning lawyer can make sure all documents are in order and help individuals determine the signing method that would best fit their needs. Consider visiting with the estate planning lawyers at Abelaj Law, P.C. at 212-328-9568 to learn more about how to determine whether you may qualify for an exemption.