The LLC Exemption Myth
Owning your New York City apartment through an LLC does not automatically exempt it from the city's new pied-à-terre tax. The surcharge, which took effect July 1, 2026, applies to non-primary residences regardless of whether title is held by an individual or an entity.
The confusion stems from the tax's majority-interest rule. For LLC-owned properties, exemption depends on whether one or more individuals collectively hold a majority interest in the LLC and use the apartment as their primary residence. Simply structuring ownership through an LLC provides no shelter from the annual surcharge.
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—a figure that includes properties held by LLCs, trusts, and other entities alongside individual owners.
How the Majority-Interest Test Works
DOF's guidance treats an LLC-owned property as potentially exempt when the apartment serves as the primary residence of one or more individuals who collectively hold a majority interest in the LLC. The test requires both ownership documentation and proof of primary-residence use.
For single-member LLCs, the sole individual member typically holds 100% of the membership interest, easily satisfying the majority threshold. But that member must still establish that the apartment is their primary residence under DOF's rules.
Multi-member LLCs face a higher bar. An individual—or multiple individuals collectively—must hold more than 50% of the LLC's ownership interest. A 50% stake alone does not constitute a majority under the rule.
Documentation Requirements
Applicants must provide documentary evidence of both their qualifying interest in the LLC and their primary-residence use of the apartment. DOF's proposed-rule materials specify that proof of majority membership, partnership, or shareholder status requires supporting documentation of that ownership position.
The exact documents vary by LLC structure and operating agreement. Where agreements separate voting rights, profits interests, capital interests, or management authority, the method for determining 'majority interest' becomes a documentation issue rather than a straightforward calculation.
Primary-residence documentation follows the same standards applied to individual owners: voter registration, tax returns, utility bills, and other records establishing the apartment as the owner's principal home.
The Fractional Ownership Trap
A critical limitation applies where the LLC owns only a fractional share of the real property. According to the City Comptroller's reporting on DOF rules, a corporation, LLC, or partnership seeking the primary-residence exemption must hold either an undivided fee interest in the property or the entirety of the cooperative shares representing the dwelling unit.
This means a majority-interest member of an LLC that owns only a fractional property interest cannot qualify as a 'covered owner' for the exemption. The rule effectively blocks the exemption for fractional ownership structures, regardless of the individual member's stake in the LLC.
Surcharge Rates and Thresholds
The surcharge applies to condominium and cooperative units with DOF market values of $1 million or more, and to one-, two-, and three-family homes valued above $5 million. For condos and co-ops in the current phase, rates are 4% on market values from $1 million to $3 million, 5.25% from $3 million to $5 million, and 6.5% on values of $5 million and above.
The tax is calculated on the property's full market value—not assessed value—once the threshold is crossed. A Manhattan co-op valued at $1.2 million would face a $48,000 annual surcharge (4% of $1.2 million), whether owned by an individual or an LLC whose members qualify for no exemption.
Conquest's analysis shows Manhattan condos and co-ops above the threshold would face an average surcharge of roughly $69,000, with a median of about $54,000. Houses in Manhattan average about $106,000, with a median near $67,000.
Application Deadlines and Process
Property owners have until October 13, 2026 to apply for the primary-residence exemption, extended from the original October 6 deadline. The extension applies to everyone who received a DOF notice stating 'You may be subject to' the surcharge.
Appeals must include documentary proof of both majority ownership and primary-residence use. DOF determines non-primary status based on the January 5 taxable status date preceding the fiscal year, not by how much of the year the owner spent in the unit.
The first surcharge payments are expected in November 2026, following the city's property-tax billing calendar. The tax runs through June 30, 2031, when the current law sunsets.
What Owners Should Watch
The majority-interest rule remains untested in court, and commenters during the rulemaking process questioned the absence of a statutory definition of 'majority owner.' How DOF interprets complex operating agreements—particularly those with multiple classes of membership or unusual profit-sharing arrangements—will emerge through individual determinations.
Starting July 1, 2028, the tax structure changes. Condos and co-ops will be revalued based on comparable sales and moved toward the same rate schedule currently applied to houses: 0.8% on values from $5 million to $15 million, 1.05% from $15 million to $25 million, and 1.3% above $25 million.
For LLC owners unsure of their exposure, DOF's market values from the July 2026 roll provide the baseline for surcharge calculations. Those values, combined with ownership documentation and residency records, determine whether the majority-interest exemption applies.
Frequently asked questions
Does owning my NYC apartment through an LLC exempt it from the pied-à-terre tax?
No, owning your New York City apartment through an LLC does not automatically exempt it from the city's new pied-à-terre tax. The surcharge applies to non-primary residences regardless of whether title is held by an individual or an entity, and simply structuring ownership through an LLC provides no shelter from the annual surcharge.
How much is the pied-à-terre tax on a $1.2 million Manhattan co-op?
A Manhattan co-op valued at $1.2 million would face a $48,000 annual surcharge, calculated as 4% of the full $1.2 million market value. The tax is calculated on the property's full market value once the threshold is crossed, whether owned by an individual or an LLC whose members qualify for no exemption.
What is the majority-interest rule for LLC-owned apartments and the pied-à-terre tax?
For LLC-owned properties, exemption depends on whether one or more individuals collectively hold a majority interest in the LLC and use the apartment as their primary residence. The test requires both ownership documentation and proof of primary-residence use, with multi-member LLCs requiring individuals to hold more than 50% of the LLC's ownership interest.