The short answer: the surcharge is computed on the DOF market value — the "Market Value" line on your Notice of Property Value. Not the assessed value (a fraction of it), and not your sale price (often multiples of it). A $2.4M-purchase condo can sit under the $1M threshold; a "$5M house" can be over or under depending on what DOF's line says.
The three numbers
| Number | What it is | Role in the pied-à-terre tax |
|---|---|---|
| DOF market value | The Department of Finance's estimate of your property's value, printed as the "Market Value" line on the annual NOPV. For condos and co-ops, state law requires an income approach — valuing the building as if it were a rental — rather than comparable sales. | The surcharge base. Thresholds ($1M condos/co-ops, $5M houses) and the flat rates are applied to this number. Settled by DOF's adopted rules. |
| Assessed value | A statutory fraction of the DOF market value (with caps and phase-ins) used to compute your regular property tax. | None. The surcharge ignores assessed value entirely — a common source of false relief when owners see a low assessed figure. |
| Sale price | What you paid, or what the unit would trade for today. | None in Phase 1. Purchase price is irrelevant to today's bill. From July 1, 2028, Phase 2 moves to a comparable-sales basis — the one place sale evidence enters. |
Why the gap is so large for condos and co-ops
New York State law makes DOF value condos and co-ops as if they were income-producing rental buildings. The rents DOF imputes — and the capitalization math on them — produce "market values" that routinely land at a fraction of what apartments actually sell for. The gap is not a glitch; it is the valuation regime, and it has two live consequences for this tax:
- It saves many owners in Phase 1. A condo purchased for $2.4 million can carry a DOF market value of $900,000 — under the $1 million line, no surcharge, whatever the closing statement said. This is why "my apartment cost over $1M, so I owe" is the single most common false alarm we correct. Check the actual line: the free DOF value lookup or the building database.
- It stops saving them in Phase 2. From July 1, 2028, the base switches to comparable sales at a uniform $5 million threshold. Units whose income-approach values look safely low today can be pulled in by their own sales comps — the Phase-2 analysis works through who moves which way.
For co-ops there is one more step: DOF values the building, and a unit's share is the building value × the unit's ownership percentage. DOF published per-unit values for 36,677 co-op units (764 buildings) on the July 2026 roll; where a unit isn't listed, the share percentage on your proprietary lease or stock certificate is what apportions the building's value.
Reading your NOPV for this tax
- Find the "Market Value" line — that figure against the thresholds (over $1M condo/co-op · over $5M 1–3 family) decides whether the surcharge can reach you at all.
- Ignore the assessed value for surcharge purposes — it answers a different question (your regular tax).
- If the market value looks wrong, the NOPV has its own challenge process — and misleading valuation submissions carry a penalty of up to 300% of the understatement (capped at 50% of the surcharge), so the challenge should be documented, not creative. When appealing is worth it.
- Then the only remaining question is occupancy status — the three exemptions and, if a letter arrived, the 30-day playbook.
Questions owners ask
Is the NYC pied-à-terre tax based on market value or assessed value?
The DOF market value — the "Market Value" line on your Notice of Property Value (NOPV) — not the assessed value, and not what you paid. Assessed value is a fraction of market value used for your regular property tax; the surcharge ignores it. This is settled by DOF's adopted rules and consistent across DOF's published materials.
Why is my DOF market value so much lower than what my condo would sell for?
State law requires DOF to value condos and co-ops as if they were rental buildings, using an income approach, rather than from sales of comparable apartments. The resulting market values commonly run far below actual sale prices — which is why a condo that would trade for $2.4 million can carry a DOF market value under the $1 million surcharge threshold and owe nothing in Phase 1. The reverse also matters: from July 2028, Phase 2 switches to comparable sales, which can pull in units whose DOF values look safe today.
My condo cost more than $1 million — do I owe the pied-à-terre tax?
Not necessarily. The threshold is measured on the DOF market value, not your purchase price. Many condos bought for well over $1 million carry DOF market values below the threshold because of the income-approach valuation. Look up the actual number — the "Market Value" line on your NOPV, or check your building in our free database — before assuming you owe.
Official sources — quoted
The market-value base is the single most misreported point about this tax. Here is the controlling language, verbatim.
NYC Department of Finance — surcharge page (nyc.gov)
"THE DEADLINE FOR SUBMITTING AN EXEMPTION APPLICATION IS EXTENDED TO OCTOBER 6, 2026"
"For property tax years 2026-27 and 2027-28, the surcharge may apply to: One-, two-, and three-family homes valued by DOF at more than $5 million; Condominium and cooperative units valued by DOF at $1 million or more."
"Your property will not be subject to the surcharge if it is the primary residence of any of the following: The owner of the property. A tenant or subtenant. One or more individuals who collectively hold a majority interest in the LLC, corporation, or partnership that owns the property. An immediate family member of the owner or majority interest holder. The sole beneficiary or beneficiaries of a trust."
| Property type | DOF market value | Surcharge rate (% of market value) |
|---|---|---|
| One-, two-, and three-family homes | $5,000,000 or greater, but less than $15,000,000 | 0.8% |
| $15,000,000 or greater, but less than $25,000,000 | 1.05% | |
| $25,000,000 or greater | 1.3% | |
| Condominium and cooperative units | $1,000,000 or greater, but less than $3,000,000 | 4.0% |
| $3,000,000 or greater, but less than $5,000,000 | 5.25% | |
| $5,000,000 or greater | 6.50% |
Documents DOF lists for an exemption: for each occupant claimed, the most recently filed federal or state tax return, or a driver's license or other DMV-issued identification (or, failing both, a voter identification card plus other proof of primary residence); for a tenant or subtenant, additionally a copy of the current lease and one more rental document, or a Tenant or Subtenant Affidavit and two rental documents. DOF also states it "published a supplemental market value roll on July 24, 2026" that "includes, but is not limited to, those properties that may be subject to the surcharge." Source: nyc.gov — Non-primary residence property surcharge, accessed September 26, 2026.
NYC Department of Finance — Notice of Adoption of Final Rules (adopted July 14, 2026)
"This surcharge, colloquially known as the pied-à-terre tax, imposes an additional tax that is calculated as the product of a surcharge rate established by statute and the market value of the applicable property, or with respect to a residential cooperative property, a residential cooperative dwelling unit."
"Because the surcharge is based on market value, not assessed value, DOF notes that these rolls are required to include the applicable market values of properties, not assessed values."
"An individual cannot have multiple primary residences."
The rules cite Administrative Code § 11-3201 (defining "primary residence") and §§ 11-3202 to 11-3204 (the surcharge computation) and were adopted under part HH of chapter 59 of the Laws of 2026, adopted into law May 28, 2026. Full rule text and our method notes: Methodology.
Statute and fiscal estimate
New York Tax Law Article 30-C (§ 1351 definitions, including § 1351(k), which defines the base as the market value determined by the Department of Finance; § 1353 thresholds and rates), enacted as part HH of chapter 59 of the Laws of 2026. The NYC Comptroller's Fiscal Note 2-2026 projected the surcharge would reach about 11,200 of the highest-value non-primary properties for roughly $340–500 million a year.
Quotations are verbatim from the sources named, as published on the dates shown; where our summaries and a primary source differ, the primary source governs. Last checked September 26, 2026.
What does DOF's line say about your unit?
Free emailed report: your unit's official DOF market value, whether the surcharge applies, and your realistic exemption path. Usually within the hour.
Check My Unit — FreeRelated: the full price-point version of this logic — what a $2M, $5M or $10M purchase typically owes per year, and why most $2M condos owe nothing — lives in what it costs by price.
Disclaimer. This page is educational information from Conquest, a licensed New York real estate brokerage. It is not legal, tax, or accounting advice, and no advisory relationship is created by reading it. Figures reflect DOF's published rules and roll as of the "last updated" date above.