Entity-Owned Units Hit by Attribution Rules
Most corporate apartments in New York City would owe the new pied-à-terre tax because the surcharge's look-through rules attribute entity ownership to natural persons while limiting exemptions to owners, their immediate family, and qualifying tenants.
The non-primary residence surcharge, effective July 1, 2026, applies to residential property that is not anyone's qualifying primary residence. When an LLC, corporation, or partnership owns a unit, the law traces ownership to the underlying majority partners, shareholders, or members as the 'covered owners,' according to DOF's final rules adopted in August 2026.
Corporate apartments occupied by rotating employees or short-term assignees without qualifying leases will generally be treated as taxable non-primary residences. The primary-residence exemption is tied to covered owners and their immediate family, not to employees generally.
Limited Exemption Paths for Employer-Owned Units
A corporate apartment can qualify for exemption only under narrow circumstances defined in Article 30-C of the New York Tax Law.
The unit escapes the surcharge if one or more individuals holding a majority interest in the entity actually live in the unit more than half the year as their primary residence. DOF's rules require the entity to hold an undivided fee interest in the property or all shares of the co-op corporation for that unit.
Alternatively, the property qualifies for exemption if the entity rents it to an employee under a bona fide, arm's-length lease of at least 12 months and the employee uses it as their primary residence. The tenant route requires documentation that the unit serves as the employee's permanent home address, including evidence like tax returns listing the property as their primary residence.
Surcharge Rates Hit Manhattan Corporate Holdings Hard
Corporate apartments face steep annual surcharges based on DOF market values. Condos and co-ops pay 4% on market values from $1 million to $3 million, 5.25% from $3 million to $5 million, and 6.5% above $5 million.
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 are non-primary residences, with an average surcharge of $68,559. Houses face lower rates but higher thresholds: 0.8% on values from $5 million to $15 million.
A corporate apartment valued at $2.5 million would owe $100,000 annually. One valued at $4 million would pay $210,000. The surcharge applies to the full market value once the threshold is crossed, not just the excess.
Complex Structures Cannot Avoid Attribution
DOF's rules make clear that tiered structures are disregarded, limiting attempts to park corporate apartments in special-purpose entities. A parent corporation owning a subsidiary LLC that holds an apartment will still be traced back to the ultimate majority individuals.
The look-through analysis runs on the entire interest the entity holds. Partners, shareholders, or members holding a majority interest in any entity that owns residential property become covered owners subject to the surcharge rules.
Immediate family is defined as spouse, child, sibling, parent, grandparent, and grandchild. The definition does not include employees who are not family members, even if they occupy the unit year-round.
Exemption Deadline and Compliance Timeline
The exemption application deadline is October 6, 2026, following two extensions by Mayor Mamdani and DOF Commissioner Lee from the original August dates. The extension applies to everyone who received a DOF notice stating 'You may be subject to the surcharge.'
DOF mailed non-primary residence notices by August 30, 2026. First surcharge payments are due January 1, 2027. Non-primary status is determined as of the January 5 taxable status date preceding the fiscal year, not by how much of the year an owner spent in the unit.
The surcharge sunsets June 30, 2031, but Phase 2 beginning July 1, 2028, will revalue condos and co-ops on comparable sales toward the lower house rates of 0.8% to 1.3%. Corporate apartment owners can check their potential surcharge using DOF market values from the July 2026 roll.
Frequently asked questions
Is my corporate apartment subject to NYC's pied-à-terre tax?
Most corporate apartments in New York City would owe the new pied-à-terre tax because the surcharge's look-through rules attribute entity ownership to natural persons while limiting exemptions to owners, their immediate family, and qualifying tenants. Corporate apartments occupied by rotating employees or short-term assignees without qualifying leases will generally be treated as taxable non-primary residences.
How much is the pied-à-terre tax on a corporate apartment?
Corporate apartments face annual surcharges of 4% on market values from $1 million to $3 million, 5.25% from $3 million to $5 million, and 6.5% above $5 million. A corporate apartment valued at $2.5 million would owe $100,000 annually, while one valued at $4 million would pay $210,000.
Can my company avoid the pied-à-terre tax by using a subsidiary LLC?
No, DOF's rules make clear that tiered structures are disregarded, limiting attempts to park corporate apartments in special-purpose entities. A parent corporation owning a subsidiary LLC that holds an apartment will still be traced back to the ultimate majority individuals through the look-through analysis.