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 October 6, 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 October 6, 2026 exemption-application deadline applies now.
Official sources — quoted
Phase 1's rules, thresholds and dates come from these documents; note that DOF's page and rules cover the 2026–27 and 2027–28 tax years, and that no Phase-2 valuation method has been published.
NYC Department of Finance — surcharge page (nyc.gov)
"THE DEADLINE FOR SUBMITTING AN EXEMPTION APPLICATION IS EXTENDED TO OCTOBER 6, 2026"
"For property tax years 2026-27 and 2027-28, the surcharge may apply to: One-, two-, and three-family homes valued by DOF at more than $5 million; Condominium and cooperative units valued by DOF at $1 million or more."
"Your property will not be subject to the surcharge if it is the primary residence of any of the following: The owner of the property. A tenant or subtenant. One or more individuals who collectively hold a majority interest in the LLC, corporation, or partnership that owns the property. An immediate family member of the owner or majority interest holder. The sole beneficiary or beneficiaries of a trust."
| Property type | DOF market value | Surcharge rate (% of market value) |
|---|---|---|
| One-, two-, and three-family homes | $5,000,000 or greater, but less than $15,000,000 | 0.8% |
| $15,000,000 or greater, but less than $25,000,000 | 1.05% | |
| $25,000,000 or greater | 1.3% | |
| Condominium and cooperative units | $1,000,000 or greater, but less than $3,000,000 | 4.0% |
| $3,000,000 or greater, but less than $5,000,000 | 5.25% | |
| $5,000,000 or greater | 6.50% |
Documents DOF lists for an exemption: for each occupant claimed, the most recently filed federal or state tax return, or a driver's license or other DMV-issued identification (or, failing both, a voter identification card plus other proof of primary residence); for a tenant or subtenant, additionally a copy of the current lease and one more rental document, or a Tenant or Subtenant Affidavit and two rental documents. DOF also states it "published a supplemental market value roll on July 24, 2026" that "includes, but is not limited to, those properties that may be subject to the surcharge." Source: nyc.gov — Non-primary residence property surcharge, accessed September 26, 2026.
NYC Department of Finance — Notice of Adoption of Final Rules (adopted July 14, 2026)
"This surcharge, colloquially known as the pied-à-terre tax, imposes an additional tax that is calculated as the product of a surcharge rate established by statute and the market value of the applicable property, or with respect to a residential cooperative property, a residential cooperative dwelling unit."
"Because the surcharge is based on market value, not assessed value, DOF notes that these rolls are required to include the applicable market values of properties, not assessed values."
"An individual cannot have multiple primary residences."
The rules cite Administrative Code § 11-3201 (defining "primary residence") and §§ 11-3202 to 11-3204 (the surcharge computation) and were adopted under part HH of chapter 59 of the Laws of 2026, adopted into law May 28, 2026. Full rule text and our method notes: Methodology.
Statute and fiscal estimate
New York Tax Law Article 30-C (§ 1351 definitions, including § 1351(k), which defines the base as the market value determined by the Department of Finance; § 1353 thresholds and rates), enacted as part HH of chapter 59 of the Laws of 2026. The NYC Comptroller's Fiscal Note 2-2026 projected the surcharge would reach about 11,200 of the highest-value non-primary properties for roughly $340–500 million a year.
Quotations are verbatim from the sources named, as published on the dates shown; where our summaries and a primary source differ, the primary source governs. Last checked September 26, 2026.
Where do you stand — in both phases?
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Disclaimer. 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.