The Pied-à-Terre Tax: What New York City Property Owners Need to Know

On July 1, 2026, New York City began enforcing the state’s first pied-à-terre tax, an annual surcharge on residential property that does not serve as an owner’s primary residence. The measure had been proposed by successive administrations for more than a decade before finally pas

sing this year, and it now applies broadly enough that many owners of second homes, and any trust or LLC that holds one, need to understand where they stand.

Who the Tax Applies To

• One- to three-family homes assessed above $5 million, at rates from 0.8% to 1.3%

• Condominiums and cooperative units assessed above $1 million, at rates from 4% to 6.5%

• Any of the above without a qualifying individual using it as a primary residence

Because co-ops and condos are typically assessed well below market value, the $1 million threshold reaches far more Manhattan apartments than the number alone suggests.

The Litigation Pause

On August 10, a Staten Island judge issued a temporary restraining order halting enforcement after homeowners sued, alleging their primary residences had been wrongly flagged. The City has said it will appeal, with a Council oversight hearing set for August 18 and a further court hearing on August 31. The rollout is unsettled. The underlying statute, its rates, and its 2031 sunset are not, and owners should not wait on the litigation before reviewing their own exposure.

Trust and LLC Ownership Adds Complexity

The exemption is tested against the person who actually occupies the unit, not the record owner. That creates two situations worth reviewing now:

• A trust-owned apartment qualifies only if a settlor or beneficiary genuinely lives there as a primary residence, and can document it

• An LLC-owned apartment qualifies only if an individual holding a majority interest occupies it as a primary residence

Structures built years ago for probate avoidance, privacy, or liability protection were not designed with this tax in mind, and may now carry exposure that has nothing to do with why they were created.

A Practical Perspective

For clients with New York City real estate held in trust, in an LLC, or through any layered structure, the appropriate step is a deliberate review: confirming who occupies each property, whether that occupancy can be documented, and whether the Department of Finance’s assessed value — not market value or purchase price — brings the unit within reach of the surcharge at all. That review is worth doing now, restraining order or not.