The short answer: an over-threshold second home owes a flat 4%–6.5% of its full DOF value every year. A 12-month lease zeroes that and adds income — roughly a $120,000-a-year swing on a $1.4M-DOF condo. Selling ends the exposure permanently; keeping can be rational if Phase 2 (2028, $5M threshold) will drop you out.
Once your unit tests over the threshold and no residency exemption fits, the pied-à-terre tax reduces to one decision with three doors: absorb the surcharge, lease for 12 months, or sell. Each door has a number on it. This page is the framework we use to put real figures on all three — the same analysis we run, free, with your unit's actual DOF value and current rental comps.
Door 1 — Keep it and pay
The baseline. A condo with a $2,000,000 DOF market value owes $80,000 a year (4% of the full value); at $4,000,000 it's $210,000 (5.25%); at $6,000,000, $390,000 (6.5%). Two features soften the picture at the margins: the tax sunsets June 30, 2031 unless extended, and Phase 2 (from July 1, 2028) re-bases condos and co-ops on comparable sales with a $5M threshold and 0.8%–1.3% rates — many Phase-1 payers drop out entirely at that point, and DOF has expressly deferred the Phase-2 methodology to future rulemaking. Paying can be rational for an owner who values access highly and expects to fall under the Phase-2 threshold. It is expensive for everyone else.
Door 2 — Lease it for 12 months
A bona fide arm's-length 12-month lease to a tenant who makes the unit their primary residence takes the surcharge to $0 — and replaces it with income. The honest math stacks the full cost side: broker fee (typically 12–15% of annual rent), management if you're remote (8–12%), maintenance reserves, vacancy risk — against gross rent at today's at-or-near-record Manhattan levels. On most over-threshold units the lease wins the arithmetic decisively: you are not just avoiding a six-figure charge, you are collecting one.
What the spreadsheet won't show: a qualifying lease means zero personal use for the full term. No holiday weeks, no lending it to family, no "mostly rented." The exemption requires an actual tenancy, and the lease forecloses your own key. For owners who bought the apartment to use it, this cost is real — price it honestly.
Door 3 — Sell
Selling ends the exposure permanently and harvests today's price. The factors that push toward this door: a surcharge that materially exceeds what the unit adds to your life; no appetite for landlording; a basis and market position where exiting now is attractive; and the risk that a recurring six-figure carrying cost gets priced into what buyers of pied-à-terre stock will pay over time. The factors that push against: transaction costs, taxes on gain, the 2031 sunset, and the chance Phase 2 drops your unit out of the tax in 2028. This is the door where the decision is least about the surcharge and most about the asset — which is why we model it with actual comparables, not rules of thumb. The modeling comes from Conquest, our Manhattan brokerage, and the same team handles the sale if you choose that door.
The worked example
| — | $2M condo | $4M condo |
|---|---|---|
| Annual surcharge if kept as a pied-à-terre | −$80,000 | −$210,000 |
| Illustrative gross rent (market comps set the real figure) | +$120,000 | +$216,000 |
| Broker fee (~13% yr 1), management (~10%), reserves | −$34,000 | −$60,000 |
| Swing: lease vs. pay (surcharge avoided + net rent collected) | ≈ $166,000/yr | ≈ $366,000/yr |
Illustrative only — your unit's DOF value sets the surcharge and the rental market sets the rent. The free review replaces every line with your actual numbers.
Run your own numbers
The same model, live. Enter your unit's DOF market value (the "Market Value" line on your NOPV — look it up free if you don't have it) and an honest market rent; adjust the cost assumptions if yours differ.
Educational model under the conservative flat-rate reading (a marginal reading would lower Door 1 — details). Rent, fees and vacancy are your assumptions; the free review replaces them with live comps. Carrying costs you pay behind every door (common charges, insurance, base property tax) are excluded because they don't change the comparison.
Questions owners ask
Should I rent or sell my NYC pied-à-terre because of the new tax?
Compare three numbers: the annual surcharge if you keep it (4%–6.5% of the full DOF market value for condos over $1M), net income from a qualifying 12-month arm's-length lease (which zeroes the surcharge), and the net proceeds of a sale. On most over-threshold units the lease wins the pure arithmetic — a $2M condo's $80,000 surcharge becomes roughly $166,000/yr of positive swing when leased at market — but a lease means zero personal use for the term. Selling fits owners who won't landlord and value exiting exposure permanently.
Does the pied-à-terre tax end?
The statute sunsets June 30, 2031 unless extended. Separately, Phase 2 (from July 1, 2028) re-bases condos and co-ops on comparable-sales values with a $5M threshold and 0.8%–1.3% rates — many units paying in Phase 1 drop out of the tax entirely in Phase 2. DOF has deferred the Phase-2 valuation methodology to future rulemaking.
How much rent covers the NYC pied-à-terre surcharge?
The lease exemption doesn't require rent to cover the surcharge — any bona fide arm's-length 12-month lease to a primary-resident tenant eliminates it. The comparison that matters is net rent (gross minus roughly 12–15% first-year broker fee, 8–12% management, reserves and vacancy) versus the surcharge you'd otherwise pay; for most over-threshold Manhattan units net rent exceeds the surcharge comfortably.
Get the three doors priced for YOUR unit.
Free analysis from a senior Conquest agent: your official DOF value and surcharge, what the unit would lease for on a qualifying 12-month lease, what it would sell for today — and a candid recommendation. No fee, no obligation.
Check My Unit — FreeTiming notes for 2026
- The surcharge runs per year — every month of indecision on an over-threshold unit accrues real cost.
- Leases have lead time — marketing, screening and closing a quality 12-month tenancy takes weeks; the exemption starts with the tenancy, not the intention.
- Deadlines are live — if a DOF notice arrived, the 30-day rebuttal and the Oct 6 exemption windows come first. Start here.
- Phase 2 planning — a unit likely under $5M on a comparable-sales basis has a strong argument for bridging with a lease until 2028 rather than selling. That's a per-unit call, not a slogan.
Related: if the reason you're considering selling is the tax itself, read Sell or Bridge to 2028? first — for homes under $5M of real value, Phase 2 likely ends the problem in July 2028, and the exit costs usually exceed the bridge.
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. Deadlines and figures reflect DOF's published rules and roll as of the "last updated" date above.