Implementation Status
New York City’s Pied-à-Terre surcharge took effect on July 1, 2026. The surcharge authorizes New York City to impose an annual levy on residential property that does not serve as the owner’s primary residence. A lawsuit has since challenged the city’s implementation of the surcharge.
Recently, the New York City Department of Finance (“DOF”) began mailing notices to approximately 17,000 property owners identified as potentially subject to the surcharge. The DOF also published a supplemental market value roll listing more than 900,000 residential property owners—including their names, addresses, and assessed fair market values—as potentially falling within the surcharge’s scope.
The surcharge applies to one-to-three-family homes valued at $5 million or more, as well as condominiums and cooperative apartments valued at $1 million or more, when the owner maintains a separate primary residence. Properties that serve as the primary residence of the owner or a qualifying tenant are not subject to the surcharge.
The DOF has set a September 18, 2026 deadline for property owners to submit exemption documentation for both residential homes/condominiums and cooperative apartments. Exemptions may be available where:
- The property is the owner’s primary residence;
- The property is occupied by a qualifying family member;
- The property is leased to a qualifying tenant;
- An immediate family member of the owner or majority interest holder of a business entity is using the property as a primary residence, or the sole beneficiary or beneficiaries of a trust are using the property as their primary residence.
Property owners who believe their property may be subject to the surcharge should not assume that the absence of a notice means the surcharge does not apply. Even without a notice, an owner may be subject to the surcharge if a timely exemption application is not filed.
Earlier this month, a group of New York City homeowners filed suit challenging the rollout of the surcharge.
The lawsuit contends that under the authorizing statute, the city had a duty to assess and determine which properties fall within the scope of the new surcharge, rather than placing the burden on homeowners to affirmatively apply for exemptions.
Additionally, the homeowners challenge the publication of the supplemental roll, arguing it “has caused mass confusion” and led to “unwanted scrutiny of homeowners’ personal information.”
Notably, the lawsuit challenges the administration of the surcharge rather than the legality of the surcharge itself.
A judge initially granted a temporary restraining order (TRO) blocking parts of the rollout. However, the city has appealed this ruling and contends that the appeal has the effect of staying the enforcement of the temporary restraining order. The city has indicated that it intends to continue implementing the surcharge during the appellate process.
This remains an active legal battle, and President Trump has also suggested the federal government may pursue its own challenge to the surcharge.
Steps for Property Owners
Affected property owners should take the following steps:
- Do not assume the surcharge is on hold. The city has stated it will continue implementation during the litigation. Until the litigation is resolved, owners should continue to evaluate whether the surcharge applies to them.
- Review any DOF notice immediately. Owners who received a notice should preserve it and submit all required information before the applicable deadline.
- Check whether your property is on the supplemental roll. Even without a notice, owners should check physical mailboxes (notices were mailed by ordinary mail) and review the DOF’s published supplemental market value roll.
- Evaluate exemption eligibility. Determine whether any properties qualify for the primary residence, bona fide tenant lease, or immediate family member exemption, and whether any entity or trust ownership structures may limit eligibility.
- Consider long-term planning options. The surcharge may result in significant annual carrying costs. Affected owners may wish to evaluate whether to establish the property as a primary residence (where feasible and where domicile in another state like Florida is not maintained), convert the property to qualifying rental use, or reevaluate the long-term ownership or use of underutilized residential property.
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