Adrian Garcia Diaz

New York State lawmakers have enacted a new annual “pied‑à‑terre” tax applicable to certain high‑value residential properties in New York City that are not used as a primary residence. The tax is designed as a surcharge imposed in addition to existing real property taxes and will apply beginning with fiscal years commencing on or after July 1, 2026.

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.

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.