2019 vs. 2026: What Passed Is Not What Was Proposed

The short version

The original Hoylman bills (2014, revived 2019 — history here) proposed a single sliding surcharge of 0.5% to 4% on the market value of second homes above $5 million, all property types treated alike. The enacted 2026 law (how it passed) splits the world in two: houses keep a $5M+ threshold, but condos and co-ops are pulled in once their Department of Finance market value tops just $1 million, at much higher, flat rates charged on the entire value — with a revaluation onto comparable-sales value in 2028, exemptions the old bills never had, and a five-year sunset.

	2019 proposal	2026 enacted law
Condo/co-op base	Market value (annual appraisal)	DOF market value (income approach, Phase 1 to 2028), then comparable-sales value
Condo/co-op threshold	$5,000,000 market	$1,000,000 market value
Condo/co-op rates	0.5%–4% (graduated on the slice)	4% / 5.25% / 6.5%, flat on full market value ($1M / $3M / $5M brackets)
1–3 family homes	Same 0.5%–4% over $5M	0.8% / 1.05% / 1.3%, flat on full DOF market value ($5M / $15M / $25M brackets)
Family exemption	Narrow	Primary residence of spouse, child, sibling, parent, grandparent or grandchild qualifies
Rental exemption	Unclear	Arm's-length lease ≥12 months to a primary-resident tenant exempts the unit
Entity look-through	Basic	Explicit: trusts via beneficial owners, entities via majority holders; no-majority entities taxable regardless of occupancy
Sunset	None	June 30, 2031
Administration	New annual appraisals (the fatal flaw)	Existing DOF market values + property-tax billing machinery

Why the threshold and the math changed — and why it matters enormously

The 2019 bill died substantially on administrability: valuing unique luxury units at market every year invited a decade of litigation. The 2026 drafters solved it by borrowing a number the city already produces for every unit — the market value on your NOPV, which for Class 2 property is derived from capitalized income, not sales comps, and is usually a fraction of your sale price. What changed from 2019 is not the base but the threshold and the math: the entry point dropped from $5M to $1M, and the rate is now flat — once a unit clears the threshold, the bracket rate applies to its entire market value, not just the slice above it.

The consequences cut both ways:

• The DOF market value is not your sale price. Because the Class 2 income approach typically lands far below what a unit would fetch, some condos that trade for several million still show a DOF market value under $1M and owe nothing — for now.
• But many more owners are caught than a $5M headline suggests. The threshold is only $1M of DOF market value, and once a unit clears it the full value is taxed at 4–6.5% — not the 0.5–4% marginal slice of the old bill. A unit at $1.4M market value owes 4% of the whole $1.4M — roughly $56,000 a year.
• Phase 2 reshuffles the deck. On July 1, 2028, condos and co-ops are revalued on comparable-sales value and converge toward the house schedule (roughly 0.8%–1.3% over $5M). Owners near any threshold should re-run the numbers annually.

What the industry won

REBNY and the brokerage community fought the steepest drafts and lost the war but won meaningful battles: the sunset clause, the family-member exemption, the 12-month-lease exemption (which converts the tax into, effectively, a vacancy tax on luxury units), the deferral of market-value assessment to 2028, and keeping Senator Fahy's $2.5M-threshold upstate companion off the budget. For owners, the lease exemption is the single most valuable concession — it means the surcharge is optional for anyone willing to rent their unit to a real tenant for a year. That trade-off is exactly what our free exposure review models.

What the 2019 fight left behind

One more artifact of the failed 2019 push still bites every luxury buyer today: the progressive mansion tax (up to 3.9%) and supplemental transfer tax Albany enacted instead. New York's second-home owners now face both regimes — the one-time 2019 consolation prize at closing, and the annual 2026 surcharge for holding. How they stack is covered in Mansion Tax vs. Pied-à-Terre Tax.