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NYC’s Pied-à-Terre Tax moves forward—but key questions remain

18 May 2026

Central Park aerial view, Manhattan, New York; Park is surrounded by skyscraper

New York State Governor Kathy Hochul has provided details for calculating the highly controversial pied-à-terre tax on second homes in New York City. A hurdle facing the proposed tax is that the New York City Department of Finance typically assesses the properties well below what they could sell for in the market. The proposed tax addresses this obstacle by instituting the tax at lower thresholds then initially discussed. The Governor's office argues that properties assessed by the Department of Finance around US$1 million generally sell for around US$5 million. Accordingly, in the first two years, a 4% levy will be applied to condos and co-ops valued from US$1 million to US$3 million, a 5.25% levy will be applied to condos and co-ops valued from US$3 million to US$5 million, and a 6.5% levy will be applied to condos and co-ops valued at more than US$5 million.

For one- to three-family homes, the tax would apply if the property is valued at US$5 million or more. For properties valued from US$5 million to US$15 million, the levy is 0.8%; for properties valued from US$15 million to US$25 million, the levy is 1.05%; and for properties valued at US$25 million or more, the levy is 1.3%.

The Governor's office estimates that this tax will apply to approximately 10,000 homes across the city. The Governor's office also states that this levy will raise US$500 million a year. Comptroller Mark Levine's report estimates a lower figure, projecting that between US$340 million and US$380 million will be raised.

There are still unknowns about how to implement this tax in light of the city's approach to valuing condos and co-ops. Under the city's property tax system, condos and co-ops are treated as rental properties by statute, which has been a source of contention as it often leads to their being undervalued. It is also unclear how to treat a co-op building, since residents own shares in the building rather than the units outright.

These underlying issues in New York City's property tax system have come to the forefront in the pied-à-terre tax discussion and questions remain on what the tax would look like after the initial two years. The Governor's office indicated that the city would change this valuation system within two years after which the valuation of condos and co-ops would be more in line with one-to-three family homes. As Hogan Lovells has discussed in past articles, any changes to the existing property tax system would be very controversial so it remains to be seen whether the two- year timeline would be realistic.

Our team will continue monitoring this issue, along with further updates on the pied-à-terre tax.

Authored by Susan Davidson and Adrian Diaz.