New York has enacted a new annual surcharge on certain high-value residential properties in New York City that are not used as primary residences. The surcharge applies beginning with the New York City fiscal year that starts July 1, 2026. The New York City Department of Finance (DOF) began its implementation and enforcement of the Pied-á-Terre tax on July 23, 2026, with the mailing of over 31,000 notices to property owners throughout the five boroughs. The DOF originally set late-August 2026 deadlines to file an appeal but extended the deadline to September 18, 2026. An ensuing lawsuit brought by impacted homeowners has created uncertainty regarding enforcement of the tax, but taxpayers should be prepared for any outcome.

Below is a summary of the new surcharge and the steps to take if you own, lease, or hold through an entity or trust a New York City home, condominium, or cooperative apartment.

How the New Surcharge Works

The new surcharge applies to certain high-value residential properties in New York City that are not used as a primary residence. The surcharge is annual. It is imposed in addition to regular New York City real property taxes.

Covered Property

The surcharge generally applies to the following New York City residential property types:

• One-to-three-family homes,
• Condominium units, and
• Cooperative apartments.

Vacant land is not within the core description of covered residential property.

Primary-Residence Exemptions

A property is generally not subject to the surcharge if it is used as the primary residence of:

• The owner,
• The owner’s spouse, child, sibling, parent, grandparent, or grandchild, or
• A qualifying tenant under a bona fide arm’s-length lease of at least one year.

The tenant exemption should be reviewed carefully. The lease should support that the tenant is a natural person paying arm’s-length rent under a lease term of at least one year and using the property as the tenant’s primary residence.

Rates for One-to-Three-Family Homes

For one-to-three-family homes (Tax Class One), the surcharge generally applies when the property has a New York City Department of Finance value of at least $5 million. The rate schedule is:

Transitional Rates for Condominiums and Cooperatives

Condominium units and cooperative apartments (Tax Class Two) are subject to special transitional rules for the first two New York City fiscal years, beginning July 1, 2026, and ending June 30, 2028. During this transition period, the surcharge applies at lower value thresholds and higher rates because New York City’s current valuation method for condominiums and cooperative apartments generally values those properties below market sale prices.

Beginning July 1, 2028, New York City is expected to move condominiums and cooperative apartments to a comparable-sales valuation method for this surcharge. At that point, condominiums and cooperative apartments are expected to use the same thresholds and rates that apply to one-to-three-family homes.

Department of Finance Notices and Challenges

In concert with the mailing of notices, the DOF launched a dedicated website (nyc.gov/npsurcharge) to provide extensive and detailed resources to property owners. Along with a specific code and instructions on how to apply for an occupancy-based exemption (whether by individual occupancy, immediate family occupancy, or qualified tenant occupancy), the website includes helpful information, including an eligibility guide and a supplemental market value roll to assist in determining a property’s final valuation assessment as determined by the DOF. Taxpayers that did not receive a notice or are unsure if they are subject to tax can (1) check the tax rolls linked on the DOF website, or (2) use the Contact Us link at the bottom of the website to request an email copy of the preliminary notice.

The DOF notices are not assessments, but rather indications that a property may be subject to the surcharge. To properly apply for an exemption through the DOF’s website, a property owner must submit proof of occupancy by a qualified individual, specifically one of the following:

• The owner of the property,
• A tenant or subtenant,
• One or more individuals who collectively hold a majority interest in the LLC, corporation, or partnership that owns the property,
• An immediate family member of the owner or majority interest holder, or
• The sole beneficiary or beneficiaries of a trust.

All property owners will be required to provide their most recently filed federal or state tax return. If unavailable, they may provide another proof of address using two of the following three items: 1) driver’s license, 2) voter identification card, or 3) other proof of primary residency. Additional documentation requirements vary based on which exemption applies.

Surcharge exemption applications were originally set as August 21, 2026, for residential homes and condos and August 24, 2026, for cooperative units, but the DOF established a September 18, 2026, deadline for all properties.

The DOF website includes, among other things, guidance on what documentation should be submitted before the August deadlines to show qualification for any of the above-listed exemptions.

New York City Tax Commission Appeals 

A NYC Tax Commission’s surcharge appeal page has also been created, with information on how to appeal primary residence determinations as well as property values.

Taxpayers seeking to appeal the primary residence determination must be aware of the following:

• Taxpayers can appeal 2026/2027 and 2027/2028 Market Value Determinations by March 1, 2027, for Tax Class Two properties, or March 15, 2027, for Tax Class One properties.
• Where Initial appeals of DOFs residency determination were made to DOF, taxpayers may appeal DOF’s final determination (on residency) to the Tax Commission by March 1 or March 15, 2027, deadline, or within 30 days of the date on the final determination by DOF.
• If taxpayers chose to appeal both DOF’s primary residence and Market Value Determinations to the Tax Commission, deadlines are March 1, 2027, and March 15, 2027, based on tax class, as noted above.
• Taxpayers can appeal DOF’s final determination on primary residency.

Understanding Potential Next Steps

Owners of New York City residential property that may be subject to the new surcharge should consider reviewing the following areas:

• Review property exposure: identify whether your New York City residential property may be subject to the surcharge based on property type, the New York City Department of Finance value, ownership, and use,

• Document primary residence: help assemble documentation showing that the property is used as a primary residence by you, a qualifying family member, or a qualifying tenant,

• Substantiate family-member and tenant exemptions: determine whether the property may qualify for an exemption based on use by a spouse, child, sibling, parent, grandparent, grandchild, or qualifying tenant. For tenant-occupied properties, review lease terms, rent records, and supporting documentation to help determine whether the arrangement appears to meet the arm’s-length, one-year lease, and primary-residence requirements,
• Analyze ownership structures: evaluate how the surcharge may apply to properties owned through trusts, limited liability companies, partnerships, corporations, nominee arrangements, or other legal entities, and
• Maintain compliance and record retention: create a process to maintain annual primary-residence support, monitor future New York City Department of Finance guidance, review property-tax statements, and retain documentation for the audit period.

The Takeaway

If you own, control, or use a New York City residence that may fall within the new pied-á-terre surcharge rules, Andersen can help you evaluate whether the tax applies, identify available exemptions, and prepare supporting documentation. The first New York City Department of Finance notices have been issued, and with a short deadline period to apply for exemption, affected owners should gather primary-residence, lease, family-occupancy, and ownership documentation immediately. Andersen will continue to monitor this issue for developments, including the litigation and/or any action taken by the Department of Finance or publication of any other form of technical guidance.