NYC's Pied-à-Terre Tax Is Now Law — What Second-Home Owners Need to Know

This one moved fast. What started as a budget proposal in April is now signed law. On May 27, 2026, New York State passed the pied-à-terre tax as part of its $268 billion budget. It took effect July 1st. First bills arrive this November.

If you own a second home in New York City — or you're thinking about buying one — here's everything you need to know right now.

What is the NYC pied-à-terre tax?

The NYC pied-à-terre tax is an annual surcharge on high-value New York City residential properties that are not used as a primary residence. "Pied-à-terre" is French for "foot on the ground" — in real estate it refers to a secondary home someone keeps in the city but doesn't live in full time.

Think: a hedge fund manager who lives in Greenwich but keeps a Park Avenue co-op for weeknight stays. A foreign investor with a Tribeca condo they visit a few times a year. A Florida resident who bought a place on the Upper East Side during the pandemic.

Those are the people Albany is taxing.

Who has to pay?

The tax applies to three property types where the owner's primary residence is outside NYC:

• One-to-three family homes with a DOF market value of $5 million or more
• Condominiums with a DOF assessed value of $1 million or more
• Cooperative units with a DOF assessed value of $1 million or more

You're exempt if the property is your primary residence, or the primary residence of your spouse, child, sibling, parent, grandparent, or grandchild. Properties rented to a full-time NYC resident under an arm's-length lease of at least one year are also exempt.

The city estimates roughly 10,000 properties citywide will be affected.

What are the actual tax rates?

This is where most of the media coverage has been confusing. The tax has two phases — and Phase 2 is the one that will catch people off guard.

Phase 1: July 2026 – June 2028

One-to-three family homes (based on DOF market value):

• $5M–$15M: 0.8%
• $15M–$25M: 1.05%
• Above $25M: 1.3%

Condos and co-ops (based on DOF assessed value):

• $1M–$3M: 4%
• $3M–$5M: 5.25%
• Above $5M: 6.5%

The condo and co-op rates look much higher — because DOF assessments for these properties run far below their actual market value. A condo that would sell for $5 million on the open market might carry a DOF assessed value of just $1.1 million. The Governor's office estimates a $1 million DOF value corresponds to roughly a $5 million market value.

Phase 2: July 2028 – June 2031

Here's the part most owners haven't planned for. Starting July 2028, the city shifts to a comparable-sales valuation method — pushing assessments much closer to actual market value. Rates drop to 0.8%–1.3% across all property types. Sounds like relief. It isn't.

A condo currently carrying a $1.1 million DOF value might face a Phase 1 bill of around $45,000. Once revalued closer to its $18.5 million sale price under Phase 2, that same unit faces roughly $194,000 annually. The rate went down. The bill went up by a factor of four. Owners who absorb Phase 1 and stop thinking about it are setting themselves up for a significant surprise in two years.

What about LLCs and trusts?

Holding your NYC apartment in an LLC or trust doesn't protect you. The law looks through entity ownership. For LLCs, partnerships, and corporations, the majority interest holders are treated as the covered owners. For trusts, the beneficial owner is treated as the covered owner — as long as they are the sole beneficiary. The substance of who uses the property matters more than the name on the deed.

What's the timeline?

Here's exactly where things stand as of today:

• July 1, 2026 — Tax takes effect ✅
• August 30, 2026 — DOF must notify affected owners; owners can contest by submitting proof of primary residence
• November 2026 — First bills arrive
• January 1, 2027 — First year payment due in full
• July 1, 2028 — Phase 2 begins; valuation shifts to comparable sales

What does this mean for Brooklyn?

If Brooklyn is your primary residence, this tax doesn't touch you directly.

But the NYC Comptroller's analysis identified nearly 1,900 Brooklyn properties potentially subject to the surcharge — concentrated in brownstone neighborhoods where high-end townhouses and luxury condos have crossed the value threshold. Park Slope, Carroll Gardens, Cobble Hill, Brooklyn Heights, Dumbo, the waterfront. These are neighborhoods we know well.

When owners of those properties decide they'd rather sell or rent than pay an annual surcharge — especially once Phase 2 math kicks in — it could shift inventory in markets that have had very little of it. That's worth watching closely.

Does this affect average NYC homeowners at all?

Directly, no. If your home is your primary residence, you are fully exempt.

Indirectly, the ripple effects are real:

Sellers entering the market. Some non-resident owners will list rather than pay an escalating annual bill. High-end inventory could loosen in neighborhoods that have been extremely tight.

Renters entering the market. Some owners will pivot to renting their units to qualify for the exemption. That adds luxury supply to the rental pool and can ease pressure at the top of the rental market.

Co-op boards taking on new responsibility. Co-op corporations are now responsible for collecting the surcharge from non-resident shareholders and remitting it to the city. That adds administrative complexity — and potential friction — to co-op transactions.

The bottom line

The pied-à-terre tax is no longer something to monitor. It's here. It started five days ago. And the Phase 2 revaluation in 2028 means the real financial impact for many owners is still two years away from being fully felt.

If you own a high-value NYC property that isn't your primary residence, the time to understand your exposure is now — not after the bill lands in November. And if you're buying, selling, or just trying to understand what this means for the neighborhood you live in, that's exactly the kind of conversation I'm here for.

Questions about how this affects your home's value or a transaction you're navigating? Reach out — I'm happy to talk it through.

Laurie Savino
www.savinoteam.com
laurie.savino@corcoran.com