New York enacts annual Pied-à-Terre tax on high value non primary residences in NYC: What to know

The tax applies only to “covered properties,” defined generally as residential real property that is not occupied as a primary residence by the owner or otherwise exempt, such as through qualifying full‑time tenancy or family occupancy.

The tax applies to Class 1 properties (one‑, two‑, and three‑family homes) and Class 2 condominium and cooperative properties. Other property types, such as rental apartment buildings, commercial properties, or certain unsold sponsor units, generally fall outside the scope of the tax. The Department of Finance (DOF) has until August 30, 2026 to provide notice to owners of properties that are subject to the tax.

The tax is being implemented in two phases. In the first phase which runs for fiscal years 2026-2027 and 2027-2028, the tax will apply to Class 1 homes with a market value of US$5,000,000 or higher and to condominium and cooperative properties with a market value of US$1,000,000 or higher. In the second phase, which begins with the fiscal year 2028-2029, the levy will be imposed on Class 1 homes and condominium and cooperative properties with a market value of US$5,000,000 or higher.

The first phase rates for Class 1 homes are .8% for properties valued between US$5,000,000 and US$15,000,000; 1.05% for properties valued between US$15,000,000 and US$25,000,000; and 1.3% for properties valued above US$25,000,000. For condominium and cooperative properties, the first phase rates are 4% for properties valued between US$1,000,000 and US$3,000,000; 5.25% for properties valued between US$3,000,000 and US$5,000,000; 6.5% for properties valued above US$5,000,000.

The second phase rates, which apply to both Class 1 homes and condominium and cooperative properties, are .8% for properties valued between US$5,000,000 and US$15,000,000; 1.05% for properties valued between US$15,000,000 and US$25,000,000; and 1.3% for properties valued above US$25,000,000.

The reason for the two-phase structure, and the initial lower threshold for condominium and cooperative properties, is the City's existing assessment methodology, which often produces valuations significantly below actual market prices. The law mandates that DOF value condominium and cooperative properties in Phase Two using a comparable sales method, a methodology DOF is currently barred by statute from using for those properties.

The two-phase structure also raises questions of whether there will be a push for broader property tax reform before the 2028-2029 fiscal year. If the current methodology does not change before that time, it is unclear how DOF will implement a sales-based valuation for calculating the pied‑à‑terre tax for condominium and cooperative properties.

If you have questions or believe your property may be subject to the tax, please contact the Hogan Lovells Tax Certiorari team which is continuing to monitor developments in this space.

Authored by Susan Davidson and Adrian Diaz.