The short answer: from July 1, 2028, the surcharge applies only to non-primary residences worth over $5 million — every property type — with value set by comparable sales, not DOF's current market-value line. Many $1M–$5M condo and co-op payers drop out; high-value units whose DOF values understate what they'd sell for can be pulled in. DOF has not published the Phase-2 methodology, and Phase-1 bills come first either way.
The two phases, side by side
| Phase 1 (Jul 1, 2026 – Jun 30, 2028) | Phase 2 (Jul 1, 2028 – Jun 30, 2031) | |
|---|---|---|
| Threshold | $1M condos & co-ops · $5M 1–3 family houses | $5M — all property types |
| Valuation basis | DOF market value (the NOPV "Market Value" line) | Comparable sales — methodology not yet published |
| Rates — condos/co-ops | Flat 4% ($1M–$3M) · 5.25% ($3M–$5M) · 6.5% (>$5M) on the full value | Rate schedule for the comparable-sales base to be specified in DOF's Phase-2 rules |
| Rates — 1–3 family | Flat 0.8% ($5M–$15M) · 1.05% ($15M–$25M) · 1.3% (>$25M) on the full value | |
| Authority | NY Tax Law Article 30-C (§1353); DOF final rules adopted July 14, 2026 (Phase 1 only) | |
| Sunset | The statute expires June 30, 2031 unless renewed | |
Who drops out — and who gets pulled in
Likely out: the bulk of today's payers. Phase 1's $1 million condo/co-op threshold reaches deep into ordinary Manhattan and brownstone-Brooklyn apartments — our roll analysis counts 24,173 units over the Phase-1 line. A uniform $5 million threshold, even on a more generous valuation basis, is a much smaller club.
Watch the measuring stick: the reason "under $5M DOF value" is not the same as "out in 2028." DOF's Phase-1 market values for condos and co-ops come from an income approach that routinely lands far below what units actually trade for — a unit carrying a $3 million DOF value can have $6 million of comparable sales behind it. Phase 2 switches to those comparable sales. Some owners who never saw a Phase-1 bill for a house under $5M DOF value may also find the sales comps tell a different story. Until DOF publishes how it will select and adjust comps, no one can compute a definitive Phase-2 bill — treat any "your 2028 bill will be exactly X" claim as a guess.
What is actually unknown
- The methodology. The adopted July 14, 2026 rules cover Phase 1. DOF has not published how Phase-2 comparable-sales values will be derived, appealed, or updated.
- The rate schedule mechanics as applied to the new base — the statute frames the phases, the administrative detail is DOF's to fill in.
- Whether the statute reaches its sunset unchanged. Albany enacted this in a single session in May 2026; it can amend it as quickly. Our legal challenges tracker follows the litigation that could reshape any of it.
What Phase 2 does not change
- Your current bills. Phase-1 surcharge runs from the January 1, 2027 payment through June 30, 2028 on today's thresholds and rates. Two years of payments come before any Phase-2 relief.
- The September 18, 2026 deadline. Exemption applications are due now, not in 2028 — waiting for Phase 2 is not a strategy. See the three exemptions that work.
- The exemption structure. Primary residence, immediate-family occupancy, and the 12-month arm's-length lease remain the paths to $0 in both phases.
Questions owners ask
When does Phase 2 of the NYC pied-à-terre tax start?
July 1, 2028. Phase 1 runs from July 1, 2026 through June 30, 2028 on DOF market values with a $1 million threshold for condos and co-ops and $5 million for 1–3 family houses. From July 1, 2028, Phase 2 applies a single $5 million threshold to every property type, with value determined from comparable sales rather than DOF's income-method market value. The statute sunsets June 30, 2031 unless renewed.
Will my condo drop out of the tax in Phase 2?
Possibly. Many Phase-1 payers — condos and co-ops with DOF market values between $1 million and $5 million — fall below Phase 2's uniform $5 million threshold and would owe nothing from July 1, 2028. But the measuring stick changes too: Phase 2 uses comparable-sales value, which for most Manhattan condos runs well above DOF's income-method value, so a unit with a $3 million DOF value but $6 million in comparable sales could stay in. DOF has not yet published its Phase-2 valuation methodology, so no one can compute a definitive Phase-2 bill today.
Does Phase 2 change what I owe now?
No. Phase-1 bills run from the January 1, 2027 property-tax bill through the fiscal year ending June 30, 2028, on the current thresholds and rates. Waiting for Phase 2 is not an exemption strategy — two years of Phase-1 surcharge come first, and the September 18, 2026 exemption-application deadline applies now.
Where do you stand — in both phases?
Free emailed report: your unit's official DOF market value, your Phase-1 exposure, and the Phase-2 outlook for your situation. Usually within the hour.
Check My Unit — FreeDisclaimer. This page is educational information from Conquest, a licensed New York real estate brokerage. It is not legal, tax, or accounting advice, and no advisory relationship is created by reading it. Phase-2 statements reflect the statute as enacted; DOF's Phase-2 administrative rules were unpublished as of the "last updated" date above.