Entity Ownership Doesn't Automatically Trigger Tax
An LLC-owned Manhattan apartment valued at $2.8 million would face an $112,000 annual pied-à-terre surcharge unless the natural person holding majority interest in the entity uses it as their primary residence.
The Department of Finance adopted final rules in July that permit entity-owned properties to claim the primary-residence exemption through a majority-interest look-through. The rules reject the assumption that corporate or LLC ownership automatically makes a property subject to the surcharge.
"One or more natural persons who collectively hold a majority interest" can establish primary residency, according to the adopted DOF rules, but only if the entity owns the apartment directly and the property serves as that person's actual primary residence.
Direct Ownership Required, No Stacked Entities
The rules limit entity look-through to situations where the LLC, corporation, or partnership "holds the entire ownership interest in the property" or all shares of a cooperative corporation. Multi-tier structures don't qualify.
An individual cannot establish primary-residence status through layered LLCs or other stacked entities, the DOF rules state. The entity holding the apartment must be the one where the natural person holds majority interest.
For co-op apartments, the entity must own all shares allocated to the unit. Partial entity ownership doesn't trigger the look-through provision.
Majority Interest Can Be Aggregated
Multiple natural persons can combine their ownership stakes to reach majority control. The DOF rules allow aggregation of "ownership interests of shareholders, members, or partners" to meet the majority-ownership threshold.
All qualifying majority holders must use the property as their primary residence. If a husband and wife each hold 30% of an LLC that owns a $3.2 million condo, they collectively meet the majority test, but both must claim the apartment as their primary residence.
The surcharge applies to the full DOF market value once the $1 million threshold is crossed. For condos and co-ops, rates run 4% on $1 million to $3 million, 5.25% on $3 million to $5 million, and 6.5% above $5 million.
September Deadline Extended for Exemption Claims
Property owners who received DOF exemption notices have until October 6, 2026, to file for the primary-residence exemption. DOF extended the original August deadlines on August 1.
Conquest's analysis of DOF's July 2026 Supplemental Market Value Roll shows roughly 17,000 Manhattan condos and co-ops would owe the surcharge if they qualify as non-primary residences. The median surcharge for Manhattan condos and co-ops above the threshold would be $53,665.
The tax becomes effective July 1, 2026, with first payments due January 1, 2027. Regular property tax abatements do not offset the pied-à-terre surcharge.
Frequently asked questions
Can my LLC-owned apartment avoid the pied-à-terre tax if I live there as my primary residence?
Yes, if you hold majority interest in the LLC and use the apartment as your primary residence, you can claim the primary-residence exemption. The Department of Finance adopted rules in July that permit entity-owned properties to avoid the surcharge through a majority-interest look-through provision.
What happens if my spouse and I each own 30% of an LLC that owns our Manhattan condo?
You can combine your ownership stakes to meet the majority control requirement since the DOF rules allow aggregation of ownership interests. However, both you and your spouse must use the property as your primary residence to qualify for the exemption.
When do I need to file for the primary residence exemption and when does the tax start?
Property owners who received DOF exemption notices have until October 6, 2026, to file for the primary-residence exemption. The tax becomes effective July 1, 2026, with first payments due January 1, 2027.