IMPORTANT — EFFECTIVE JULY 1, 2026

New York's New

Pied-à-Terre Tax

Is Now Law

A landmark annual surcharge on non-primary NYC residences takes effect in 30 days. If you own a co-op, condo, or townhouse that is not your primary home — or know someone who does — here is what you need to know now.

Enacted as part of the 2026–27 New York State Budget, this annual surcharge applies to co-ops, condominiums, and 1–3 family homes that do not serve as a primary residence. The law runs through June 30, 2031, and is structured in two phases with meaningfully different valuation methods and rates.

Full-time NYC primary residents are generally not affected. However, if you maintain a home here as a secondary residence — or own property in NYC while your primary residence is elsewhere in New York State — you may be directly impacted.

Co-op Owners Note: Please see below for some quick guidance to calculate the Department of Finance (DOF) imputed market value for a co-op apartment which determines the tax requirement. Please feel free to reach out. We will be happy to provide more detailed information or talk you through this.

Email Us Here or Call Us - 212 717 9717.

Important for Co-op Owners

"The co-op's aggregate surcharge is billed directly to the building. The board is then responsible for collecting from each qualifying shareholder — and the entire building faces lien exposure if a shareholder fails to pay."

— NYC Administrative Code, Title 11, Chapter 32 (§§11-3201–11-3208)

A WORKED EXAMPLE — PREWAR UPPER EAST SIDE CO-OP

*(LISTED FOR SALE AT $6,895,000)

Building DOF Market Value: $18,306,000

Shareholder's Proportionate Shares: 5.81%

Imputed Phase 1 Unit Value: $1,063,812

Applicable Rate (bracket $1M–$3M): 4.00%

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Estimated Annual Surcharge: ~$42,550/yr

*Note: The actual market value of this apartment is approximately $6,895,000. The DOF imputed value represents roughly 15% of actual market — illustrating the profound disconnect Phase 2 is designed to correct.

STEPS TO CALCULATING A CO-OP APARTMENT'S IMPUTED MARKET VALUE:

1. Find DOF Market Value for the building HERE

2. Review records to determine the Number of Shares for the apartment.

3. Request or review the building's most recent Financial Statement and review the Shareholders Equity to see the building's Shares Issued and Outstanding.

4. Calculate (Number of Apartment Shares ÷ Building Shares Issued) x DOF Building Market Value = DOF Apartment Market Value

What Isn't Yet Resolved

KEY OPEN QUESTIONS

The DOF has not yet issued implementing rules. Until they do, significant uncertainty remains:

- Will the surcharge be assessed as a "cliff tax" on the full value, or marginally on the amount above the threshold? The answer has a significant dollar impact either way.

- What documentation will the DOF require to certify primary residence? Initial DOF notices must be responded to before they become final — notices are due by August 30, 2026.

- How will mid-year sales and ownership transfers be handled — buyer or seller liability?

- What remedies does a co-op board have if a shareholder refuses to pay? Lien rights on shares, maintenance surcharges, and share cancellation are all currently unresolved.

- How will Phase 2 comparable-sales valuations be calculated, and what recourse will owners have to challenge them?

Let's Talk Through How This Affects You

Whether you own a townhouse, condo or co-op pied-à-terre, or are weighing a purchase or sale ... we are here to walk through the numbers with you.

As always, this is general informational guidance only. We can connect you with qualified tax and legal counsel for advice specific to your situation.

Warm regards,

Thor & Melissa Thors

Global R.E. Advisors

Lic. Assoc. R.E. Salespersons

M: 212.717.9717

thor.thors@compass.com

melissa.thors@compass.com