New York City Imposes a Property Tax Surcharge on Second Homes
August 4, 2026Under New York City's newly-enacted "pied-a-terre" tax (the "PAT Tax"), a condo, co-op or 1-3 family house (each, a "Covered Property") is subject to a hefty annual property tax surcharge (in addition to regular property taxes) if (1) the Covered Property has "market value" in excess of a specified threshold and (2) the Covered Property is not used as a "primary residence" by the owner, an immediate family member of the owner, or an individual tenant under a market-rate lease.
- The threshold "market value" is (1) for the PAT Tax's first two fiscal years (July 26/27 and July 27/28), $1 million for a condo/co-op and $5 million for a 1-3 family house and (2) thereafter, $5 million for all Covered Properties (regardless of type).
- "Market value" is set forth on the property tax records for the Covered Property and does not reflect a Covered Property’s actual fair market value.
- Unless a special rule applies, a Covered Property will not qualify as a primary residence if it is owned by an entity (such as corporation or trust) or is vacant for any reason (including remodeling work or a resident's death).
To collect the PAT Tax, New York City will determine each year whether a Covered Property is subject to the PAT Tax based on available information (as of January 5th) and send an "initial determination" letter with the PAT Tax due to the record owner. If a record owner does not respond within thirty days of the transmission date of the "initial determination" letter, the record owner cannot dispute the PAT Tax due, even if the letter's delivery is delayed or never happens.
On July 22, 2026, New York City sent the first batch of "initial determination" letters. In addition, New York City published a list ("Supplemental Market Value Roll - July 2026") of the properties it has determined to be subject to the PAT Tax and set up a resource center for owners. On August 1, 2026, the Mayor and Department of Finance Commissioner announced that homeowners have until September 18, 2026 to submit exemption applications to the surcharge.
In light of the strict requirements for primary residence status and tight appeal deadline, every owner should actively monitor whether any Covered Property is subject to the PAT Tax. Don’t wait to receive (or not) your "initial determination" letter.
If you need more information about the PAT Tax or have questions about how the PAT Tax applies to your particular situation, please contact:
Mark A. Limardo at +1 (212) 592-1494 or [email protected]
Barbaros M. Karaahmet at +1 (212) 592-1570 or [email protected]
© 2026 Herrick, Feinstein LLP. HERRICK® is a registered trademark of Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.