DOF Rule Settles Valuation Base
New York City's pied-à-terre tax applies to the market value of non-primary residences, not their assessed value, according to the Department of Finance's adopted administrative rules.
The distinction matters because assessed values for condos and co-ops typically run about 45% of market value. A $2 million condo carries roughly a $900,000 assessed value, meaning the difference determines whether an owner faces a $80,000 annual surcharge or a $36,000 bill.
DOF's final rule states the surcharge "is calculated as the product of a surcharge rate established by statute and the market value of the applicable property." The same regulation specifies that surcharge rolls "are required to include the applicable market values of properties, not assessed values."
How Property Values Appear on Tax Documents
The confusion stems from how New York presents property valuations. A Notice of Property Value displays both the market value and the lower assessed value used for regular property tax calculations.
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 used as non-primary residences. These units carry an average market value of $1.7 million but assessed values closer to $765,000.
Commentary describing the tax as roughly twice the statutory rate appears to reflect confusion between these two figures, according to the adopted DOF regulation.
Current Rates and Thresholds
The surcharge applies flat rates to the full market value once thresholds are crossed. Condos and co-ops face 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 $1.5 million condo would generate a $60,000 annual surcharge under the market-value calculation. Using the assessed value would produce a $27,000 bill, but DOF's rule makes clear that approach is incorrect.
Houses face lower rates but higher thresholds: 0.8% on market values from $5 million to $15 million, 1.05% from $15 million to $25 million, and 1.3% above $25 million.
Implementation Timeline and Legal Challenges
The tax took effect July 1, 2026, with exemption applications originally due August 21 for most properties. DOF extended that deadline twice, most recently to October 6, 2026, for owners who received non-primary residence notices.
Three homeowners filed suit August 7, 2026, challenging the implementation process. Justice Wayne Ozzi issued a temporary restraining order August 10, though the city stated it would continue implementation during appeals.
On September 29, 2026, the court ordered the city to remove the challenged property roll from its website while allowing a replacement roll limited to properties actually subject to the surcharge. The underlying law remains in effect through June 30, 2031.
What Owners Should Know
Property owners can check their market value exposure using DOF's July 2026 Supplemental Market Value Roll. The "Market Value" line on a Notice of Property Value shows the figure DOF uses for surcharge calculations.
Primary residence exemptions protect most owners, but the determination hinges on January 5 taxable status rather than time spent in the unit during the year. Immediate family members and arm's-length tenants can also qualify properties for exemption.
The tax structure changes in fiscal 2029, when condo and co-op valuations shift toward comparable sales methodology and lower rate brackets. Those changes remain two years away and subject to the law's 2031 sunset provision.
Frequently asked questions
Is my apartment subject to the pied-à-terre tax based on market value or assessed value?
The pied-à-terre tax applies to the market value of non-primary residences, not their assessed value, according to the Department of Finance's adopted administrative rules. The distinction matters because assessed values for condos and co-ops typically run about 45% of market value, significantly affecting the tax amount owed.
How much is the tax on a $1.5 million condo used as a non-primary residence?
A $1.5 million condo would generate a $60,000 annual surcharge under the market-value calculation. Condos and co-ops face 4% on market values from $1 million to $3 million.
Does the ruling change how I can check if my property owes the surcharge?
Property owners can check their market value exposure using DOF's July 2026 Supplemental Market Value Roll, and the "Market Value" line on a Notice of Property Value shows the figure DOF uses for surcharge calculations. The DOF's final rule confirms that surcharge calculations use market value, not the lower assessed value that appears on the same tax documents.