What the surcharge is and when it applies
The surcharge is an annual charge on non-primary residences in New York City. Signed May 28, 2026, it took effect July 1, 2026 and sunsets June 30, 2031. The charge is calculated on the property's market value—the figure shown on the Department of Finance Notice of Property Value, not the assessed value used for regular property tax.
For condominiums and cooperatives in Phase 1 (2026–2028), the rate is 4 percent if market value falls between $1 million and $3 million, 5.25 percent from $3 million to $5 million, and 6.5 percent at $5 million or above. For one- to three-family houses, the rate is 0.8 percent from $5 million to $15 million, 1.05 percent from $15 million to $25 million, and 1.3 percent at $25 million or above.
The charge applies to the full market value once the threshold is crossed—it is not marginal. A condominium valued at $1.1 million owes $44,000 annually if it is a non-primary residence; one at $999,000 owes nothing. Primary residences of the owner or immediate family (spouse, child, sibling, parent, grandparent, grandchild) are exempt, as are units leased for twelve months to an arm's-length natural person. Entities are subject to majority-interest look-through rules.
The property's market value determines exposure
A buyer should request the seller's most recent Notice of Property Value and confirm the market-value figure DOF has on file. That number, not the assessed value and not a broker's opinion, controls the surcharge calculation.
Conquest's analysis of DOF's July 2026 Supplemental Market Value Roll shows that roughly 24,000 units citywide would be exposed to the surcharge if they are non-primary residences. In Manhattan, 16,709 condominium and cooperative units fall above the $1 million threshold; the median surcharge for those units would be $53,665 annually. Brooklyn has 649 condos and co-ops above the line, with a median surcharge of $46,763.
The top exposure ZIP codes are 10013 (Tribeca, 1,751 units), 10021 (Upper East Side, 1,368 units), 10022 (Midtown East, 1,245 units), and 10011 (Chelsea, 1,181 units). In 10019, which includes much of the West 50s, 975 units are exposed to an average surcharge of $86,862.
Another 4,400 units sit within $100,000 of the $1 million threshold. A modest DOF revaluation or a single comparable sale can move a unit across the line between closings.
What the seller did—or did not do—about exemption
DOF mailed non-primary-residence notices by August 30, 2026. The exemption application deadline, originally set for August 21 and August 24, 2026, was extended twice—first to September 18, then to October 6, and most recently to October 13, 2026, according to an extension announced by Mayor Mamdani and DOF Commissioner Lee on October 6.
A buyer should ask the seller for a copy of any DOF notice, the exemption application if one was filed, and any determination or correspondence from DOF or the Tax Commission. If the seller did not file, the buyer inherits a property that DOF has flagged as non-primary. If the seller did file and was denied, the buyer should understand why.
The exemption is not self-executing. DOF requires documentation that the property is the primary residence of the owner, an immediate family member, or a qualifying tenant. A seller's statement that 'I live here most of the time' does not satisfy DOF's certification requirements, and a buyer who assumes exemption without verifying the record may face a January 2027 bill with no administrative remedy remaining.
Litigation has created procedural uncertainty
On September 29, 2026, a Richmond County Supreme Court judge invalidated parts of DOF's rollout and ordered the City to cancel previously mailed notices and remove the supplemental roll. New York City filed an appeal the same day. Professional analysis states that the appeal produced an automatic stay of the trial court's order, but the appellate posture affects what owners must do next and when.
A buyer closing today does not know whether DOF will re-mail notices, whether the October 13 deadline remains operative, or whether a future appellate decision will require a new exemption process. The contract should allocate responsibility for responding to any DOF notice received after closing and for cooperating in any appeal or valuation challenge the buyer may need to file.
The contract must address bridge exposure
The statute and DOF materials do not establish a definitive closing rule that allocates surcharge liability between buyer and seller for every possible period, reassessment, or delayed determination. The first payment is due January 1, 2027, but DOF may issue retroactive bills or add properties to a supplemental roll after that date.
The contract should state explicitly who pays any surcharge attributable to the seller's ownership period, who pays for periods after closing, whether funds will be escrowed for an anticipated charge, who responds to post-closing DOF notices, and what happens if DOF later issues a bill covering months before the closing. The Comptroller's October 2026 report describes a process in which DOF communicates with owners, receives attestations or appeals, and may then include the additional tax in property-tax bills—indicating that the absence of a surcharge on the current bill does not establish that the property is permanently outside the regime.
Phase 2 headroom is not yet defined
From July 1, 2028, condominium and cooperative units are scheduled to be revalued on comparable sales and moved toward the $5 million threshold and the 0.8 to 1.3 percent rate schedule that currently applies only to houses. The available official and professional materials describe the initial 2026 notice and review process but do not establish a final, operative Phase 2 threshold, property count, or remaining headroom that a buyer can safely use for underwriting.
A buyer should ask DOF or counsel whether the property is on any current or withdrawn supplemental roll, whether DOF has issued an individualized determination, whether the property is expected to be reviewed in a later phase, and whether any statutory or administrative cap limits additional notices. No reviewed source establishes a settled Phase 2 timetable as of late October 2026.
Leasing out the unit is not a simple exemption
A lease can affect primary-residence eligibility, but not every lease automatically qualifies the property for exemption. The relevant question is whether the tenant's use satisfies the statutory and administrative requirements—a twelve-month arm's-length lease to a natural person who makes the unit a primary residence.
Before closing, verify the condominium or cooperative lease and sublease rules, any board or proprietary-lease restrictions, zoning and occupancy requirements, rent-regulation implications if applicable, whether the intended lease term and tenant use support the exemption, and whether the building's documents impose restrictions beyond the tax statute. DOF's published appeal information recognizes that primary residence may involve a lessee or sublessee but also requires certification and proof concerning the property's primary-residence use. A buyer should not treat 'the unit is rented' as equivalent to 'the unit is exempt.'
What to do before you sign
Request the seller's Notice of Property Value and confirm the market-value figure. Ask for any DOF surcharge notice, exemption application, and determination. Verify that the contract allocates surcharge liability for the seller's ownership period and for any retroactive or supplemental bill. Confirm that the property's lease and sublease rules, if leasing is part of the buyer's plan, support a qualifying tenancy under DOF's exemption requirements.
If the property's market value is within $100,000 of the $1 million threshold, ask DOF or counsel whether a pending revaluation or comparable-sales adjustment is likely before the next roll. If the seller did not file for exemption by October 13, 2026, understand that the buyer may need to file a late application or a Tax Commission appeal and that DOF may deny relief for a missed deadline.
Conquest's free DOF market-value and surcharge checker shows the market value DOF has on file for any address and calculates the annual surcharge if the property is non-primary. The tool is updated from DOF's July 2026 roll and reflects the Phase 1 rate schedule. It does not determine exemption eligibility or predict Phase 2 exposure, but it answers the threshold question every buyer should ask before closing: what is the property's current market value, and what would the surcharge be if this is not my primary residence?
Frequently asked questions
Is my apartment subject to the NYC pied-à-terre tax if it's worth $1.1 million?
Yes, a condominium or cooperative valued at $1.1 million that is not your primary residence would owe $44,000 annually under the surcharge that took effect July 1, 2026. The charge applies to the full market value once the $1 million threshold is crossed—it is not marginal—so a unit at $999,000 owes nothing while one at $1.1 million owes the full 4 percent.
How much is the pied-à-terre tax on a $3.5 million condo in Manhattan?
A condominium with a market value of $3.5 million that is a non-primary residence would pay 5.25 percent of the full market value annually, which equals $183,750 per year during Phase 1 (2026–2028). The rate is 4 percent between $1 million and $3 million, 5.25 percent from $3 million to $5 million, and 6.5 percent at $5 million or above.
Does renting out my NYC apartment exempt it from the pied-à-terre surcharge?
Leasing out the unit can qualify for exemption, but only if the lease is for twelve months to an arm's-length natural person who makes the unit a primary residence. Not every lease automatically qualifies; DOF requires certification and proof concerning the property's primary-residence use, and the building's lease and sublease rules must also support a qualifying tenancy.