On May 7, 2026, Governor Hochul and Mayor Mamdani signed New York's first-ever pied-à-terre tax into law as part of the state's FY2027 budget. The surcharge takes effect July 1, 2026. If you own — or are in the process of buying — a Manhattan or Brooklyn apartment as a second home, this is something you need to understand before you close.
We have been getting questions about this from clients all week. Here is the honest breakdown.
Who the Pied-à-Terre Tax Actually Applies To
The name comes from the French phrase meaning "foot on the ground" — a small in-city apartment used occasionally by someone who lives elsewhere. But the tax isn't limited to small apartments. It applies to:
- Condominiums, co-operatives, and one- to three-family homes in New York City
- With a market value at or above $5 million
- Where the owner's primary residence is outside the five boroughs
The "outside the five boroughs" piece is the critical test. If your primary home is in Westchester, Connecticut, New Jersey, Florida, California, or London — and your NYC property is $5M or more — this tax very likely applies to you.
The city uses primary residence status the same way it does for NYC personal income tax purposes. If you already file and pay NYC personal income tax as a city resident, your property is exempt — even if it is worth $20 million. The surcharge is designed specifically for owners whose principal life is somewhere else.
The $5 Million Threshold
The $5 million threshold refers to market value, not assessed value. NYC's assessed values for residential property are typically a fraction of market value. If your apartment is worth $4.9 million, you are not in scope for this tax.
How Much the Pied-à-Terre Tax Costs
The rate structure is tiered and graduated based on the value of the property. Under the law as passed, the annual surcharge is structured to reach approximately $25,000 per year on a $10 million second home and higher on properties above that.
Starting in the 2028–2029 tax year, the rate structure transitions to market-value-based rates:
To put those numbers in concrete terms: a $6 million pied-à-terre would face roughly $48,000 per year under the 2028–2029 structure. A $20 million apartment would face roughly $210,000 per year.
A few important notes. First, the implementation mechanics are still being finalized — the city will likely use a filing system similar to the existing Real Property Income and Expense (RPIE) framework, requiring annual attestation of primary-residence status. Second, this is an annual ongoing cost, not a one-time fee at closing. It stacks on top of your existing property taxes, co-op maintenance or condo common charges, and other carrying costs.
Action Required Before Closing
We recommend that every client buying a $5M+ NYC property as a second home get a clear picture of this cost from their real estate attorney and CPA before they sign a contract. The total annual carrying cost changes the math on a purchase — and changes it meaningfully.
What the Pied-à-Terre Tax Does Not Apply To
Here is what we are telling clients who are worried they are affected but may not be:
Your primary residence is always exempt.
If you live in Manhattan or Brooklyn as your primary home — pay NYC income tax, vote here, call this home — the pied-à-terre tax does not apply to your apartment, regardless of its value.
Properties rented out regularly are exempt.
The law includes a rental carve-out: if you're generating rental income from the property, you fall outside the tax's scope. This is already prompting some second-home owners to reconsider keeping their units vacant and to explore placing them on the rental market instead. The definition of "regularly rented" is still being detailed in the implementation rules — talk to your attorney if you're considering this path.
Properties below $5 million are not affected.
This is a distinction that matters for the majority of buyers in our market. If you're purchasing a $2 million co-op in the West Village or a $3.5 million condo in Downtown Brooklyn as a second home, the pied-à-terre tax doesn't apply to you. The mansion tax still applies at closing on any purchase of $1 million or more — but that's a separate, one-time cost, not this annual surcharge.
First bills won't arrive until late 2026.
The tax is effective July 1, 2026, but the billing cycle will lag. Properties closed today will not receive a pied-à-terre surcharge bill for several months. That doesn't mean the liability doesn't exist — just that the first payment won't be immediate.
What This Means for Buyers and Sellers in Manhattan and Brooklyn
Here is the honest picture of what this law is likely to do to the market.
Buyers currently under contract at $5M+
If you're in attorney review right now on a property above the threshold and your primary residence is outside the city, recalculate your annual carrying costs immediately. This is a new line item in your budget. Some buyers are choosing to proceed; others are factoring it into final negotiation positions. Your attorney and CPA need to be part of this conversation before you close.
Sellers of $5M+ properties
The tax narrows your buyer pool. Future purchasers who are non-NYC-residents will price the annual surcharge into what they're willing to offer. It doesn't mean your property is worth dramatically less — but it does mean the buyers who will pay top dollar for a luxury second home have a new ongoing cost to factor in. Pricing strategy matters more now.
Buyers in the $1M–$4.99M range
This specific tax doesn't affect you. The search traffic around this topic is high right now, and a lot of buyers are worried about something that doesn't apply to their purchase. What does apply to you is the mansion tax — a one-time buyer-paid tax of 1%–3.9% on any NYC residential purchase of $1 million or more. That's a separate conversation, and one worth having before you start making offers.
International buyers and second-home investors
New York has historically been one of the most attractive global cities for a high-end pied-à-terre. That calculus still holds in many cases — the city's fundamentals, the scarcity of high-quality inventory in neighborhoods like Chelsea, the West Village, DUMBO, and the Upper East Side, and the long-term asset value haven't changed. But the after-tax carrying costs have. Any investor modeling the economics of a NYC second home now needs this surcharge in the spreadsheet.
The rental exemption is also reshaping some decisions. We are already hearing from owners of high-value second homes who are evaluating whether placing their apartment on the rental market makes more financial sense than keeping it as a personal-use pied-à-terre. If that trend picks up, it could modestly increase rental inventory at the high end — a dynamic worth watching.
Every situation is different. What this means for a buyer under contract on a $6 million Chelsea condo is not the same as what it means for someone considering a $12 million townhouse in the West Village. The details of your primary residence status, how you plan to use the property, and how you'll hold title all affect your exposure.
Frequently Asked Questions
Does the pied-à-terre tax apply if my NYC apartment is worth less than $5 million?
No. The pied-à-terre tax applies only to NYC second homes with a market value at or above $5 million where the owner's primary residence is outside the five boroughs. If your property is valued below that threshold, you are not subject to this annual surcharge — though other NYC and NYS taxes (including the mansion tax and transfer taxes) may still apply at purchase. Consult your attorney to confirm which taxes apply to your specific situation.
Is the pied-à-terre tax the same as the mansion tax?
No — they're two completely different taxes. The mansion tax is a one-time tax paid by the buyer at closing on any NYC residential purchase of $1 million or more, ranging from 1% to 3.9% of the purchase price. The pied-à-terre tax is an annual surcharge owed every year for as long as you own a qualifying NYC second home. They can both apply to the same property, but at different points in the ownership timeline and at very different amounts.
What if I rent out my NYC second home — am I still subject to the pied-à-terre tax?
Properties that are regularly rented out are currently exempt from the pied-à-terre tax under the law's rental carve-out. If you generate rental income from your NYC property, you likely fall outside the tax's scope — but the definition of "regularly rented" and the compliance mechanics are still being finalized. Talk to your real estate attorney and CPA before assuming you qualify for this exemption.
When will I receive my first pied-à-terre tax bill?
The tax is effective for the fiscal year beginning July 1, 2026, but first bills are not expected until approximately November 2026. If you close on a NYC second home today, you won't receive a bill for several months. That said, the annual surcharge will be an ongoing carrying cost from this fiscal year forward — it's worth understanding the liability now even if the first payment isn't immediate.
Does the pied-à-terre tax apply if I buy through an LLC or another entity?
Likely yes. New York City applies similar taxes to transfers of controlling interests in entities that own residential property, and the pied-à-terre tax framework is expected to follow the same approach. Structuring through an LLC does not appear to be an effective strategy for avoiding this surcharge. This is a question for a NYC real estate attorney and tax advisor — not something to assume without getting specific legal guidance on your structure.
New York's pied-à-terre tax is real, it's in effect this summer, and it changes the carrying cost math for a specific segment of the luxury buyer market. If you own or are buying a $5M+ NYC second home with your primary residence elsewhere, you need this on your radar — and you need the right team around you to navigate it.
If you want to think through what this means for your specific situation — whether you're buying, selling, reconsidering a second home, or just trying to understand where the high-end Manhattan and Brooklyn market is headed — we are happy to walk through your goals, timing, and options together.
Disclaimer
Any figures in this guide are approximations. Rates, fees, and timelines vary by building, lender, and transaction, and tax law changes over time. Treat these as planning ranges, not quotes.
This is not legal or tax advice. The Miller Markowicz Team are licensed real estate professionals, not attorneys or accountants. Nothing here creates an attorney-client relationship. Always confirm your specific situation with your own attorney and accountant.
Written by
The Miller Markowicz Team at The Corcoran Group
Andreea Miller and Steven Markowicz are licensed real estate agents at The Corcoran Group specializing in condos, co-ops, townhouses, and new development across Manhattan and Brooklyn — including Downtown Brooklyn, DUMBO, Williamsburg, Park Slope, Chelsea, and the Upper East Side.
Co-Founder · Licensed Associate Real Estate Broker
Recognized among The Corcoran Group's Top 25 agents and ranked in the top 1.5% of agents nationwide by RealTrends. Known for analytical rigor in pricing and a design-led approach to preparing and presenting homes.
Co-Founder · Licensed Real Estate Salesperson
A background in luxury hospitality shapes a client experience built on anticipation and responsiveness. Focused on Downtown Brooklyn, DUMBO, Williamsburg, and Boerum Hill, with deep new development experience.
Track Record
200+ transactions closed across Manhattan and Brooklyn
Top 25 at The Corcoran Group, five of the last six months
Top 1.5% of agents nationwide by RealTrends
