“Pied-à-terre” is a French phrase, which literally translates as “foot on the ground”. The phrase has been used in real estate to describe a temporary second residence.

For certain persons who own property in New York City, the phrase, “pied-à-terre”, has a new relevance – taxation. This article discusses New York’s new “pied-à-terre” tax.

Enacted as part of New York State’s fiscal year 2027 budget, the “pied-à-terre” tax in New York is officially known as “City Surcharge on Property That Does Not Serve as a Primary Residence”. Specifically, certain luxury residential properties located in New York City that are not used as a “primary residence” will now be subject to an annual “pied-à-terre” tax. This “pied-à-terre” tax will be imposed in addition to existing real estate property taxes.

The specific amount of taxation under New York’s “pied-à-terre” tax will vary based on the type of the residential property, the value of the residential property, and the applicable date, as follows:

1. From July 1, 2026 to June 30, 2028:

a) For one-, two-, and three-family homes in New York City, if the home is valued from $5 million to less than $15 million, the annual tax is .8% of property value, if the home is valued from $15 million to less than $25 million, the annual tax is 1.05% of property value, and if the home is valued at $25 million or more, the annual tax is 1.3% of property value; and

b) For condominium and cooperative units in New York City, if the unit is valued from $1 million to less than $3 million, the annual tax is 4% of property value, if the unit is valued from $3 million to less than $5 million, the annual tax is 5.25% of property value, and if the unit is valued at $5 million or more, the annual tax is 6.5% of property value.

Valuation determinations will be made by the New York City Department of Finance. Because it is believed that the New York City Department of Finance uses a valuation methodology that undervalues condominium and cooperative units, they will be subject to lower valuation thresholds and higher percentages of taxation under the “pied-à-terre” tax.

2. Beginning July 1, 2028 to June 30, 2031 (unless the law is extended), the “pied-à-terre” tax will apply to all of one-, two-, and three-family homes, and condominium and cooperative units, in New York City at the same “valuation threshold/percentage of taxation” schedule – if the home or unit is valued from $5 million to less than $15 million, the annual tax will be .8% of property value, if the home or unit is valued from $15 million to less than $25 million, the annual tax will be 1.05% of property value, and if the home is valued at $25 million or more, the annual tax will be 1.3% of property value. In essence, the current “threshold/percentage of taxation” schedule applicable to one-, two-, and three-family homes will also apply to condominium and cooperative units beginning on July 1, 2028. As it is intended that the valuation methodology used by the New York City Department of Finance to value condominium and cooperative units will be modified by July 1, 2028 to more accurately determine value, it was thought that the above-described lower valuation thresholds and higher percentages of taxation under the “pied-à-terre” tax for condominium and cooperative units from July 1, 2026 to June 30, 2028 would no longer be necessary beginning on July 1, 2028.

Charges for New York City residential properties that are subject to the “pied-à-terre” tax will first appear on real estate property tax bills that are due on January 1, 2027.

Besides falling below the minimum valuation thresholds described above (i.e., $1 million for condominium and cooperative units from July 1, 2026 to June 30, 2028, and $5 million for one-, two-, and three-family homes from July 1, 2026 to June 30, 2031 and for condominium and cooperative units from July 1, 2028 to June 30, 2031), the best way to avoid New York’s “pied-à-terre” tax is to establish that your New York City residential property is a “primary residence”. Specifically, a residential property will not be subject to the “pied-à-terre” tax if it is the “primary residence” of the owner of the property, a tenant or subtenant of the property, one or more individuals who collectively hold a majority interest in a limited liability company, corporation, or partnership that owns the property (“a majority interest holder”), an “immediate family member” (which includes a spouse, a parent, a child, a sibling, a grandparent, or a grandchild) of the owner of or a majority interest holder with respect to the property, or the sole beneficiary or beneficiaries of a trust that owns the property.

The burden is on the property owner to establish a “primary residence” exception from New York’s “pied-à-terre” tax by submitting certain evidence to the New York City Department of Finance. In all cases, to evidence a “primary residence”, the property owner must submit either the most recently filed Federal or state tax return or a driver’s license or other “DMV-issued identification”. If all of these documents are unavailable, the property owner can submit both a voter identification card and other proof showing that the property is the “primary residence” of the property owner.

In addition to the “basic primary residence evidence” documents described in the preceding paragraph, to claim a “primary residence” exemption from the “pied-à-terre” tax in New York, in the case of a “tenant or subtenant” situation, you need to submit a copy of the current lease and one additional rental document (such as a utility bill, proof of rent payment, or renter’s insurance policy), or a “Tenant or Subtenant Affidavit” (a New York City Department of Finance form) and two such additional rental documents, in the case of a “majority interest holder” situation, you need to submit a limited liability company operating agreement, articles of incorporation, or a partnership agreement, as the case may be, and a “Majority Interest Affidavit” (a New York City Department of Finance form), in the case of an “immediate family member” situation, you need to submit a birth certificate or a marriage certificate, as the case may be, and an “Immediate Family Member Affidavit” (a New York City Department of Finance form), and in the case of a “trust” situation, you need to submit a trust agreement and a “Trustee Affidavit” (a New York City Department of Finance form).

The deadline to submit a claim for exemption from New York’s “pied-à-terre” tax is September 18, 2026. The New York City Department of Finance will review any submission for exemption and issue a determination letter as to whether the exemption is approved. If your application for exemption is denied, you can appeal the determination letter to the New York City Tax Commission.

New York’s “pied-à-terre” tax recently has been in the news based on several developments:

• On July 22, 2026, the New York City Department of Finance mailed approximately 17,000 notices concerning the “pied-à-terre” tax to property owners of New York City residential properties for which the records of the New York City Department of Finance did not establish “primary residence” status.
• On July 24, 2026, the New York City Department of Finance published “Supplemental Market Value Roll – July 2026”, providing valuations of approximately 960,000 one-, two-, and three-family homes and condominium and cooperative units in New York City. While the scope of this “Supplemental Market Value Roll – July 2026” could suggest that all of these covered properties potentially would be subject to New York “pied-à-terre” taxation, the New York City Department of Finance clarified, “The vast majority of properties and units listed in the roll will NOT be subject to the surcharge [the ‘pied-à-terre’ tax]. Only the roughly 17,000 property owners to whom DOF sent a letter [the July 22, 2026 notices described above] are potentially subject to the surcharge”.
• On August 10, 2026, in response to a lawsuit filed on August 7, 2026, a New York State court issued a temporary restraining order to halt implementation of the “pied-à-terre” tax pending further judicial review. On August 11, 2026, New York City filed an appeal of the temporary restraining order, which it contended stayed the temporary restraining order. New York City has indicated that it will continue to implement the “pied-à-terre” tax while the litigation is pending. The next court hearing in the case is scheduled for August 31, 2026.

While New York’s “pied-à-terre” tax is only applicable to New York City residential properties, it is not the only jurisdiction in the United States to consider special taxation of “non-primary residence” properties. The various arguments cited for “pied-à-terre” taxation – provide another revenue source for state budgets, “tax the rich” (as most “non-primary residence” property is owned by “wealthy” persons), tax persons who benefit from local governmental services but do not pay local income taxes, reduce local real estate costs by decreasing speculative, passive investments in residential property, discourage “vacant” properties, and discourage “foreign-owned” properties – can find a footing, and support such taxation, in jurisdictions outside of New York City. Rhode Island enacted (effective July 1, 2026) the Non-Owner-Occupied Property Tax Act (popularly referred to as the “Taylor Swift” tax based on the singer’s property in Rhode Island) that generally imposes a tax on Rhode Island residential properties with an assessed value greater than $1,000,000 that are not occupied by the owner or a tenant for 183 days or more in a “July 1 – June 30” year. Hawaii County in Hawaii and Montana have adopted real property tax systems that lower real property tax rates for “primary residence” properties relative to “non-primary residence” properties. Other jurisdictions (including Florida and municipalities in New York State outside of New York City) are considering proposals for the special taxation of “non-primary residence” properties.

If you have any questions concerning New York’s “pied-à-terre” tax, or the special taxation of “non-primary residence” properties in other jurisdictions in the United States, please discuss these issues with your advisers.

Note – Daniels Case and State Estate Tax Domicile

While residence is relevant for “pied-à-terre” taxation, residence also can be relevant for a different form of taxation – state estate taxation. A recent Connecticut Supreme Court case that considers the issue of where did a decedent reside, or, in state estate taxation terms, where was the decedent “domiciled”, for state estate taxation purposes is Daniels v. Commissioner of Revenue Services, 354 Conn. 768 (2026). The Daniels case concerned a decedent who maintained residences in Connecticut, Florida, and Arizona. It was critical to determine where the decedent was domiciled because Connecticut imposes a state estate tax, but Florida and Arizona do not impose a state estate tax. After the audit division of the Connecticut Department of Revenue determined that the decedent was domiciled in Connecticut, and therefore his estate was subject to state estate taxation, the Connecticut Commissioner of Revenue Services upheld the audit division’s “domicile” determination, and the Connecticut Superior Court ruled that the decedent’s executor had failed to establish, “by clear and convincing evidence”, that the decedent was not domiciled in Connecticut, the Connecticut Supreme Court held, “A taxpayer’s burden of proof in an appeal from an estate tax assessment is an exceptional circumstance in which important considerations of justice outweigh the interest in enforcing procedural rules governing the preservation of claims and adversarial principles. Moreover, this court has never previously had occasion to opine on the proper standard of proof required to establish domicile for estate tax purposes, and the appropriate burden of proof a taxpayer must satisfy in an appeal from a decision of the government’s taxing authority necessarily implicates both the public’s interest in and the taxpayer’s entitlement to fair and accurate taxation. The trial court improperly applied the clear and convincing evidence standard of proof, rather than the preponderance of the evidence standard, in making its domicile determination, and, accordingly, the trial court’s judgment was reversed to the extent that that court sustained the commissioner’s tax assessment, and the case was remanded so that the trial court could apply the correct standard”. By lowering the burden of proof from a “clear and convincing evidence” standard to a “preponderance of the evidence” standard, the Daniels decision should help Connecticut decedents with “domicile” connections to other “non-state estate tax” states to successfully argue that they should not be treated as domiciled in Connecticut (and therefore that their estates should not be subject to Connecticut state estate taxation). While the Daniels decision is specifically applicable only as Connecticut law, it will be interesting to see if the Daniels decision influences the law in other jurisdictions considering “domicile” issues between any of the jurisdictions that impose a state estate tax (currently, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia) and any of the jurisdictions that do not impose a state estate tax.

If you have any questions concerning the Daniels decision, or how it may influence the law in “non-Connecticut” jurisdictions, please discuss these issues with your advisers.

If you wish to discuss any of the above, find Pen Pal Gary’s contact info here.

Disclaimer: please note that nothing in this article is intended to be, or should be relied on as, legal advice of any kind. Neither LHBR Consulting, LLC nor Gary Stern provides legal services of any kind.