Should I sell my NYC apartment to avoid the pied-à-terre tax?

Usually not, if its real-world value is under $5 million. The punishing Phase-1 schedule (4%–6.5% of DOF value) runs only two fiscal years, through June 2028. From July 1, 2028, Phase 2 re-tests every property at a single $5M comparable-sales threshold — most condos and co-ops below $5M of true value exit the tax entirely. Selling typically costs 7%–8% of the price in broker fees and transfer taxes alone, which is often more than the entire two-year Phase-1 bill — and a 12-month lease can zero even that.

My house is worth under $5 million — should I sell because of this tax?

No — a 1–3 family house under $5M of DOF market value owes nothing in Phase 1 OR Phase 2. The house schedule already starts at $5M. Selling a sub-$5M house to escape this tax means paying six figures of transaction costs to avoid a tax you don't owe.

What does selling actually cost a foreign owner compared to paying the tax?

On a $4M sale: roughly $200,000–$240,000 of broker commission, about $83,000 of NYS + NYC transfer taxes, and for non-US sellers FIRPTA federal withholding of up to 15% of the gross price (~$600,000 withheld at closing, recoverable later but gone from your liquidity for months). Re-buying a smaller place adds the 1%+ mansion tax on anything $1M+. Against that, a typical liable condo's entire two-year Phase-1 exposure runs roughly $80,000–$160,000 — and an arm's-length 12-month lease can reduce it to zero.

What if my condo is worth close to $5 million?

That's the genuinely hard band. DOF has not yet published its Phase-2 comparable-sales methodology, so nobody can say today whether a $4.5M–$5.5M unit lands under or over the line in 2028. Owners in that band should run the numbers annually, keep the lease exemption in reserve, and revisit when DOF publishes the valuation rules.

Sell to Escape the Pied-à-Terre Tax, or Bridge to 2028? The Math

First, the fact that changes the whole question

The brutal version of this tax — 4% to 6.5% of DOF value for condos and co-ops over $1M — is Phase 1, and it lasts exactly two fiscal years: 2026–27 and 2027–28. From July 1, 2028, Phase 2 re-tests every property against a single $5 million threshold on a comparable-sales basis — real-world value, not today's discounted DOF figures. A condo or co-op genuinely worth less than $5M exits the tax entirely at that point, through the law's 2031 sunset. So the decision is rarely "sell or pay forever." It is "sell, or cover a two-year bridge."

If it's a house: stop — you may owe nothing at all

1–3 family houses have their own schedule with a $5M threshold from day one. A house under $5M of DOF market value owes $0 in Phase 1 and $0 in Phase 2. Selling a sub-$5M house "because of the pied-à-terre tax" means paying six figures of transaction costs to escape a tax that never touched you. Check the number before doing anything: free DOF lookup.

The bridge cost: what staying actually runs

For a liable condo or co-op, the bridge is the Phase-1 surcharge paid twice (or avoided — see below). Typical shapes, using the flat schedule on DOF value:

DOF market value	Annual (4%–5.25%)	Full two-year bridge
$1.2M	$48,000	$96,000
$1.6M	$64,000	$128,000
$2.5M	$100,000	$200,000
$3.5M	$183,750	$367,500

And the bridge has an escape hatch selling doesn't: an arm's-length lease of 12+ months to a tenant who makes it their primary residence exempts the unit for that year — rent covers the carry, the exemption erases the surcharge, and you take the home back for a tax-free Phase 2. Our rent-through-Phase-1 analysis runs that play in detail; roughly 11,972 of the 17,371 liable condos and co-ops sit in the $1.0–1.6M DOF band that plausibly exits at Phase 2.

The selling cost: what leaving actually runs

Take a condo worth $4M on the open market (DOF value ~$1.4M — liable). Selling it costs, in round numbers:

Cost of selling at $4M	Amount
Broker commission (5%–6%)	$200,000 – $240,000
NYS transfer tax (0.65% at $3M+)	$26,000
NYC transfer tax (1.425%)	$57,000
Legal, flip taxes (co-ops), misc.	$10,000 – $50,000+
Cash cost of the exit	≈ $290,000 – $370,000
Foreign sellers: FIRPTA federal withholding (up to 15% of GROSS price)	~$600,000 withheld at closing — recoverable, but locked up for months
Downsizing? Mansion tax on the replacement ($1M+)	1%–1.5% of the new purchase

Compare: the same unit's full two-year bridge is about $112,000 paid outright — or near zero leased. The exit costs two to three times the thing it's escaping, converts a recoverable annual decision into a permanent one, and for non-US sellers ties up hundreds of thousands in withholding while the refund processes. Selling makes sense when you wanted out anyway — the tax is a tiebreaker, not a reason.

When selling IS the right answer

Honesty cuts both ways. Selling deserves real consideration when: the property's true value is clearly above $5M (Phase 2 keeps it in the tax, at 0.8%–1.3% of full market value, indefinitely to the 2031 sunset and beyond if extended); you can't or won't lease it and the carry genuinely strains you; you were already planning an exit and today's market gives you your price; or the building itself has issues the tax merely spotlights. And the $4.5M–$5.5M band is the honest coin-flip — DOF hasn't written the Phase-2 valuation methodology, so nobody can promise which side of the line those units land on. Our keep-rent-or-sell model puts real numbers on all three doors.

The foreign-owner wrinkle, specifically

Non-US owners feel the extra weight on both sides: staying means the compliance traps of managing exemptions from abroad; selling means FIRPTA withholding, cross-border tax filings, and the practical impossibility of "just moving in" to claim primary residence without triggering US tax-residency consequences. Which is exactly why the 12-month lease is the foreign owner's default play — it needs no US presence, no certification risk, and no exit costs. Bridge with a tenant, hold the asset, and let July 2028 do the rest.

Run your two numbers before deciding anything

This whole decision turns on two figures: your unit's DOF market value (sets the bridge cost) and its real-world value (sets the Phase-2 outcome). We'll pull the first from the official roll and give you a broker's honest read on the second — free, with a written report: check your address.

Educational, not tax advice. Transaction-cost figures are typical NYC ranges; FIRPTA withholding is a federal requirement on dispositions by foreign persons with exceptions and reduced-withholding procedures a tax advisor can pursue. Phase-2 statements reflect the statute; DOF's Phase-2 valuation methodology remains unpublished. Cross-border owners should coordinate with counsel who can see their worldwide position.