New York passed a brand-new annual tax on second homes in New York City this year, and it’s already in effect. If you or your business owns a Manhattan, Brooklyn, or Queens condo or co-op that isn’t your primary residence, this is not a rounding error on next year’s return.

Here’s the number that should get your attention: a $1.1 million co-op — an ordinary two-bedroom in plenty of outer-borough buildings — now owes roughly $44,000 a year in surcharge alone, on top of the property tax you already pay. A $6 million unit owes about $390,000 a year. This isn’t a tax aimed at trophy penthouses. The threshold is low enough to reach a lot of ordinary apartments.

The rates, the dates, and the trap in the phase-in

The surcharge applies to condos and co-ops the NYC Department of Finance values above $1 million, where the unit is not the owner’s primary residence. For the first two tax years — the fiscal years beginning July 1, 2026 and July 1, 2027 — the rates are:

  • $1 million to $3 million in DOF value: 4% annually
  • $3 million to $5 million: 5.25% annually
  • Above $5 million: 6.5% annually

After that two-year window, the threshold shifts to $5 million of market value rather than DOF assessed value — a different number entirely, and one that matters because NYC’s assessed values for co-ops in particular often run well below what a unit actually sold for. Don’t assume your unit is safe based on a broker’s estimate or your purchase price. Pull the actual DOF-assessed value before you plan around it.

The calendar matters as much as the rate. The city has to send a non-primary-residence notice by August 30, 2026, and the first bill is due January 1, 2027 — but the liability attaches on July 1, the day the fiscal year starts. If you’re weighing a sale, a change in how the property is held, or moving your primary residence back into the unit, that decision has to happen before July 1 to affect that year’s bill. Waiting for the notice or the invoice means the year is already locked in.

Putting it in an LLC probably doesn’t get you out of this

A lot of business owners hold a second home — especially a New York City apartment — through an LLC or a trust, usually for privacy or basic asset protection, the same reasoning we’ve walked clients through on rental property held in an LLC. Here’s the problem: the pied-à-terre law is expected to look through the entity to the actual person behind it. Holding the unit in an LLC, an S-corp, or a trust does not automatically sidestep the surcharge — the state’s intent is to attribute beneficial ownership straight through to whoever really owns it.

The exact mechanics of that look-through are still being written into regulation by the Department of Finance, and that’s precisely why restructuring a property into an entity specifically to dodge this tax, before those rules are published, is a bad bet. You’d be making an expensive move based on a guess.

Own a NYC condo or co-op that isn't your primary home — personally or through an entity? Schedule a call and we'll pull your actual DOF valuation and figure out your real exposure before the July 1 line does it for you.

The federal deduction question nobody’s answered yet

Whether this surcharge is even deductible on your federal return is genuinely unsettled. Ordinary property taxes are deductible under IRC §164, but that deduction is capped at $40,000 under the SALT limit, and it’s not yet clear the pied-à-terre charge counts as a “property tax” for that purpose at all — it’s structured as a surcharge, not a straight assessment. Until the IRS or the state weighs in, plan as if you’re paying this dollar for dollar with no federal offset. That’s the conservative number, and the conservative number is the one you should budget to.

If you left New York and kept an apartment behind, or you’re holding a unit through a business entity for reasons that made sense before this law existed, don’t guess your way through this. Run the actual numbers — your DOF value, your bracket, your entity structure — before the fiscal year you’re already inside of gets more expensive to unwind.

Not sure which bracket your unit falls into, or whether your LLC actually protects you here? Book a call and we'll map it out before the August notice does it for you.

This post is for general informational purposes and does not constitute tax or legal advice. New York City's pied-à-terre tax regulations, including entity look-through rules, are still being finalized by the NYC Department of Finance and are subject to change. Consult a qualified tax professional regarding your individual situation. Geiger Tax & Accounting, Amityville, NY — serving clients nationwide — (631) 532-5622 — info@geigertax.com.