On August 10, 2026, a NYS court issued a temporary restraining order (TRO) barring the New York City Department of Finance (DOF) from imposing or collecting the City's new non-primary residence property surcharge—commonly known as the "pied-à-terre tax." The petitioners allege that the publication of a supplemental roll of owners potentially subject to the tax exceeded the City's jurisdiction and the notices mailed to thousands of owners did not constitute proper notice under law. The petitioners seek a preliminary injunction against the City. A hearing is scheduled for August 31, 2026. The City has appealed the court's order, which has the effect of staying the TRO.
The petitioners are challenging the way the surcharge has been implemented, not the law itself, so an adverse determination is likely to delay but not prevent implementation of the surcharge. Accordingly, now is the time for affected owners to learn about the surcharge – including the properties covered by the surcharge, available exemptions, rules relating to properties owned by trusts and entities, and the family-member primary residence rule.
Background and Current Status
The City's new non-primary residence property surcharge went into effect as of July 1, 2026, and is scheduled to end on June 30, 2031. DOF mailed notices to potentially affected property owners and published a supplemental roll identifying properties that may be subject to the surcharge. An initial August deadline to file exemption applications was extended to September 18, 2026.
This litigation may delay imposition of the surcharge and/or result in an extension of the exemption application deadline or other changes to DOF procedures for identifying owners subject to the surcharge. However, as of now, the September 18 exemption application deadline remains in effect.
Which Properties Are Subject to the Surcharge?
The surcharge applies to Class 1 (1-3 family home) and Class 2 (condominium and cooperative unit) properties in New York City that, as of the tax status date (January 5), meet certain value thresholds and are not the primary residence of the owner, an immediate family member, or a qualifying tenant. Owners who own more than one non-primary residence in New York City will be subject to the surcharge for each qualifying property. Value for the first year of the surcharge (July 1, 2026 – June 30, 2027) is determined based on the assessed market value of a home, condo, or co-op unit as of January 5, 2026. Specifically, the following property classes are covered:
- Class 1 (1–3 family homes): Assessed market value over $5 million.
- Class 2 (Condos and Co-ops): Assessed market value over $1 million.
The surcharge rates are as follows:
- Class 1 (1–3 family homes): $5M–$15M = 0.8%; Over $15M–$25M = 1.05%; Over $25M = 1.30%.
- Class 2 (Condos and Co-ops): $1M–$3M = 4%; Over $3M–$5M = 5.25%; Over $5M = 6.50%.
Starting July 2028, properties will be valued using comparable sales (not tax assessments), and only properties valued over $5 million will be covered. The following rates will apply to both property classes:
- Phase 2 (Class 1 and Class 2): $5M–$15M = 0.8%; Over $15M–$25M = 1.05%; Over $25M = 1.30%.
Vacant land classified as Class 1 property, properties for which a temporary or permanent certificate of occupancy is required and has not yet been issued, and certain unsold condominium and cooperative units subject to an offering plan, are excluded.
Who Is a "Covered Owner"?
Identifying the covered owner is central to determining whether an otherwise covered property may be exempt from the surcharge on primary-residence grounds. Covered owners include:
- Direct property owners, tenant-stockholders (co-op shareholders), and condominium unit owners;
- Beneficial owners of properties owned in trust, provided that such beneficial owner or owners are the sole beneficiaries of such trust (contingent and future interests are excluded); and
- Majority owners (holding more than 50% of the capital or profits) of limited liability companies, partnerships, and corporations, provided the entity itself holds an undivided fee interest in the property or all stock of the cooperative corporation, as applicable.
How to Claim an Exemption
- Covered owners who believe their property qualifies for an exemption are required to file an exemption application with DOF by September 18, 2026.
- Exemption applications require a signed certification and documentary proof of primary residency of a covered owner, an immediate family owner of a covered owner (discussed below), or a tenant or subtenant who occupies the property as his or her primary residence under a lease or sublease negotiated in an arm's length transaction for a term of at least one year. Owners who believe an exemption applies should take the time now to collect the specific information that DOF requires to demonstrate an exemption, which may include obtaining information from tenants or subtenants.
- DOF will grant exemptions to properties that enjoy the following benefits: the STAR credit (NY Tax Law § 606(eee)), the STAR exemption (New York Real Property Tax Law (RPTL) § 425), veterans' exemptions (RPTL §§ 458, 458-a, 458-b), the disabled homeowners' exemption (RPTL § 459-c), and the senior citizens' homeowners' exemption (RPTL § 467).
Additional Exemption Criteria for Properties Owned by Trusts or Entities
In addition to demonstrating primary residency, covered owners of properties held through trusts or entities must meet the following criteria to qualify for an exemption:
- For Trusts. The covered owners (all primary resident beneficial owners of the trust) must be the sole beneficiaries of the trust, and the trust must own an undivided fee interest in the property or all stock of the cooperative corporation, as applicable. Holders of contingent and future interests are disregarded for this purpose. Required proof includes the trust agreement and a trustee's affidavit confirming that the individuals are the sole beneficiaries.
- For LLCs, Partnerships, and Corporations. The property must serve as the primary residence of the covered owners (holders of a majority interest (more than 50% of capital, profits or stock) of the members, partners, or shareholders of the owner entity). In addition, the entity must own an undivided fee interest in the property or all stock of the cooperative corporation, as applicable. Required proof includes the entity's organizational documents, and an officer's affidavit confirming the residents hold a majority interest.
How a Family Member Can Preserve Primary Residence Status
A property may be eligible for the exemption if an "immediate family member" of the covered owner occupies it as a primary residence. "Immediate family member" means a spouse, child, sibling, parent, grandparent, or grandchild. This DOF list is exhaustive—in-laws and other relatives do not qualify. The immediate family member exemption applies only when the covered owner is a natural person.
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Our team is available to assist clients with exemption applications and tax planning strategies related to the non-primary residence property surcharge. If you have questions about how this new law may affect your property, please contact Suzanne St. Pierre, Hannah M. Osman, or Jahmel J. Martin.