New York City Rental Guide · Your Questions, Answered

The Pied-à-Terre Tax, What It Covers and What It Doesn’t

New York City’s pied-à-terre tax is real, it’s on the books, and as of this week it has cleared its first big test in court. On November 4, a state appeals court reversed a Staten Island judge’s ruling that had thrown the city’s rollout into question, and the first bills are due with property taxes on January 1, 2027.

The idea is simple enough: an annual surcharge on expensive homes in the city that nobody lives in full time. The details are where people get tripped up, and my phone has been busy. Owners want to know if they’re on the hook, buyers want to know what it does to the math on a second home, and plenty of people who will never pay it want to know who does and where the money goes. So here’s what I’ve been telling clients, all in one place.

A quick note before we dive in: I don’t take a side on this one. My job is to make sure the people I work with understand the rules and make smart moves under them. I’m also a broker, not a tax attorney or an accountant, so think of this as a plain-English guide to help you ask the right questions, and bring anything specific to your own tax professional.

The Tax at a Glance

The short version: if you own a high-value home in New York City that isn’t anyone’s primary residence, you’ll likely see a new line on your property tax bill every year through mid-2031.

One number trips everyone up. That $1 million line for condos and co-ops is the value the city puts on a unit for tax purposes, not what it would sell for. Because of the way the city values apartments, that figure usually sits far below the price a buyer would actually pay, which is why the apartment threshold looks so much lower than the $5 million line for houses. To see where yours stands, look up your unit’s value on the Department of Finance’s property tax site.

What It Covers

The surcharge applies to residential property in the five boroughs that isn’t a primary residence: condos, co-op apartments, and one-, two- and three-family homes above the value lines in the table. It shows up on the property tax bill and is collected the same way, and the regular tax breaks you might get on a property, like abatements and exemptions, can’t be used to shrink it.

It comes in two phases. Through June 2028, condos and co-ops are taxed on the city’s current valuation at the higher rates in the table. Starting July 1, 2028, the city switches to a new valuation model built on comparable sales, the condo and co-op line moves up to $5 million, and apartments are taxed at the same 0.8% to 1.3% rates as houses. The whole thing sunsets on June 30, 2031 unless Albany renews it.

Who actually pays. The legal owner of record pays, whether that’s a person, an LLC, a corporation or a trust. When a property is held by an LLC or a trust, the city looks through to the people behind it to decide whether it counts as someone’s primary home.

What It Doesn’t Cover

This is where most of the good news lives, and it’s why the number of owners actually paying keeps shrinking.

Where the Money Goes

The pitch from Governor Hochul and Mayor Mamdani was straightforward: use the city’s most valuable empty apartments to help close New York City’s budget gap. When the governor proposed it in April, her office said the money would help pay for the basics, like policing and parks, alongside an extra $1.5 billion the state put into the city’s budget. City Council Speaker Julie Menin backed it as a way to fund “the vital services New Yorkers rely on.” It isn’t set aside for a single program. It goes toward the city’s budget as a whole.

How much it will raise is the open question. The governor’s office projected at least $500 million a year. City Comptroller Mark Levine’s office estimated closer to $340 to $380 million once you account for exemptions and owners changing how they use their homes. Since then, the Department of Finance has granted more than 8,800 exemption requests, and reporting in October put the number of owners likely to pay at fewer than 9,000. The first real answer comes when the January bills are paid.

Where It Hits Hardest

Manhattan, by a mile. In the Comptroller’s analysis, roughly nine out of ten potentially affected properties are in Manhattan, and condos make up the biggest share of all. That points straight at the luxury towers, especially the 57th Street corridor known as Billionaires’ Row, where buildings were marketed to buyers from around the world as second homes. Analysts watching that market expect the mid-tier luxury units, the ones with plenty of similar options around them, to feel it more than the one-of-a-kind penthouses.

Brooklyn, in a different way. Brooklyn accounts for about a tenth of potentially affected properties, and almost all of them are houses, not condos or co-ops. That means the brownstone and townhouse blocks where homes trade above $5 million, the kinds of streets you find in Brooklyn Heights, Cobble Hill and along Prospect Park West. Queens, the Bronx and Staten Island barely register.

What I’m watching. Owners who don’t live in their apartments have three basic choices: pay it, rent the place out on a real one-year lease, or sell. If a meaningful number pick the second option, that could mean more high-end rentals coming on the market. If they pick the third, buyers in certain luxury buildings may find more inventory and more room to negotiate. Either way, it’s worth paying attention to over the next year.

The Latest From the Courts

This tax has been in court almost as long as it’s been law. In September, a Staten Island judge ruled that the city had botched the rollout and ordered it to redo the notices it mailed to owners. On November 4, a state appeals court reversed that decision, finding the owners who sued hadn’t shown they were actually harmed, and noting that the public list of properties used largely the same information the city already publishes on its assessment rolls. The owners’ attorney, former Deputy Mayor Randy Mastro, said the court avoided the merits of the case and that he’ll keep fighting.

That isn’t the end of it. Two separate lawsuits, including one brought by former U.S. Commerce Secretary Wilbur Ross and casino executive Steve Wynn, argue the tax is unconstitutional because it singles out people who live outside the city. Those cases are expected to move forward in December. Until a court says otherwise, the tax stands, and the January bills are coming.

What They’re Saying

Few local taxes have drawn this much heat from both directions. Here’s a taste of each side.

Where I land: I’m not here to cheer it on or knock it down. Good people disagree about whether it’s fair and whether it will raise what was promised. What I can do is make sure my clients aren’t caught off guard by it.

If You Own, or You’re Thinking of Buying

Here’s how I’d approach it, depending on where you sit.

About Jason Mezydlo

Jason Mezydlo is Managing Sales Partner at Gordon Realty Partners and has worked in New York City real estate since 2012. A graduate of the Harrington College of Design with a BFA in interior design, he brings a designer’s eye to every search, helping clients see what a space can become before they sign. Jason began his career in commercial leasing, guiding small business owners through site selection, lease negotiation and space planning, before moving into Manhattan’s luxury rental market and home sales across Manhattan and Brooklyn. A longtime Brooklyn resident, he pairs market expertise with a deep love for the city’s history, art and architecture.

347.286.5797 · jason@gordonrealtypartners.com · JasonMezydlo.com · @JasonMezydlo
Gordon Realty Partners · 622 3rd Avenue, New York, NY · NYS Licensed Real Estate Salesperson

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