On Saturday August 1, the deadline to respond to surcharge notices was extended to September 18, 2026. The announcement is available HERE.
On May 28, 2026, New York State passed a tax on high-value residential properties in New York City that do not serve as a primary residence, colloquially known as the “pied-à-terre tax”. The intent of the law is to tax non-primary residences with a value in excess of $5M. Our original client alert about the law can be found HERE.
Taxation under this law became effective as of July 1, 2026 and will be implemented in two (2) phases. Phase 1: July 1, 2026 to June 30, 2028 and Phase 2 beginning July 1, 2028. The first phase is based upon the determination by the New York City Department of Finance (DOF) of the “market value” of any property that may be subject to the tax. As we noted in our first client alert, the DOF market value does not necessarily correlate to the free market value. A summary of the tax rate for properties subject to Phase 1 of the pied-à-terre tax can be found below:
New York City Department of Finance promulgated final regulations implementing the law on July 14, 2026. The regulations can be found HERE. On July 24, 2026, the New York City Department of Finance released a list of potential subject properties. The list of the subject properties can be found HERE.
Recently, the New York City Department of Finance began mailing letters that provide a notice of a potential non-primary residence surcharge.
Not every property owner on the list issued by the DOF is subject to the tax. Only property owners to whom DOF sent a notification by mail are required to take further action.
If you have received a letter you must respond before September 18, 2026. This deadline was extended by an announcement by Mayor Zohran Kwame Mamdani and Department of Finance Commissioner Richard Lee on August 1, 2026. The announcement can be found HERE.
There are two ways to contest a letter. The first is to challenge the determination as to primary residency, and the second is to challenge the market value of a property.
Contesting Primary Residency
In order to rebut a letter based on primary residency, the unit must be the primary residency of:
- The owner of the unit
- A tenant or subtenant
- One or more individuals who collectively hold a majority interest in the limited liability company, corporation, or partnership that owns the unit
- An immediate family member of the owner or majority interest holder
- The sole beneficiary of a trust
In order to demonstrate that an individual is a primary resident of a property they must submit
- Most recently filed federal or state tax return;
OR two (2) of the following:
- Driver’s license or other DMV-issued identification;
- Voter identification card;
- Other proof showing that the property is a primary residence
In order to demonstrate that a tenant or subtenant is a primary resident of a property the owner must submit the following forms of evidence:
- A copy of the current lease and one (1) additional rental document, such as a utility bill, proof of rent payment, or renter’s insurance policy
- If there is no current lease then the owner may submit a Tenant or Subtenant Affidavit available HERE together with two (2) additional rental documents such as a utility bill, proof of rent payment, or renter’s insurance policy
In order to demonstrate that an immediate family member is the primary resident of a property the owner must submit:
- Most recently filed federal or state tax return;
OR two (2) of the following:
- Driver’s license or other DMV-issued identification;
- Voter identification card;
- Other proof showing that the property is a primary residence
AND
One (1) of the following forms of documentation of the immediate family member
- Birth certificate
- Marriage certificate
- Immediate Family Member Affidavit Form available HERE
If a property is owned by a trust or a business entity (such as an LLC, corporation, or partnership) and is used as a primary residence by a trust beneficiary, majority member, shareholder, or partner the owner must submit:
- Trust Agreement, Partnership agreement, LLC operating agreement, or articles of incorporation; and
- Trustee Affidavit available HERE (if owned by a trust) or Majority Interest Affidavit available HERE (if owned by a business entity)
Contesting the Market Value
If the unit is not a primary residence, a second method to challenge the tax is by virtue of contesting the DOF’s market value of a property by virtue of an appeal to the Tax Commission. Appeals to the Tax Commission must be made on a completed TC 107 Form available HERE. TC 107 Instructions are available HERE. The deadline to file with the Tax Commission is March 1, 2027 for Co-Op and Condo units and March 15, 2027 for 1-3 family dwellings.
The foregoing is not intended to be comprehensive nor constitute legal advice. If you would like to discuss your specific circumstances or would like more information, feel free to contact us at (212) 625-8505.