NYC Releases Pied-à-Terre Tax Determinations and Extends Challenge Deadline to September 18, 2026
August 5, 2026On July 24, 2026, the City of New York released its list of supplemental market values, and Notices of Determination related to the non-primary residence property surcharge, more commonly known at the pied-a-terre tax (“PAT Tax”). The deadline for challenging Notices of Determination has been extended from August 21 to September 18, 2026.
Property owners and condominium and cooperative boards should review the list on the New York City Department of Finance website to determine if their property appears on the list or if any shareholders of their cooperative received Notices of Determination of Non-Primary Residence and are therefore subject to the PAT Tax. Because cooperative boards will be expected to pay the tax and then seek reimbursement from shareholders, each cooperative should notify shareholders who may be subject to it that they must object to the Notice of Determination immediately.
There are basically two separate avenues for affected shareholders to challenge potential liability under the PAT: a determination of non-primary residence and the DOF’s market valuation of the apartment. Challenges to non-primary residence determinations go before the DOF. Challenges to market valuation go before the Tax Commission. When the challenge is to the non-primary residence determination, the shareholder should immediately begin marshaling evidence to file with the DOF by the September 18th deadline. Failure to object within this deadline will result in the loss of such rights. Individual cooperative shareholders who have received a Notice of Determination are not identified by name. Rather, the cooperative buildings are listed by name of the corporate entity and then affected shareholders’ apartment designations are separately identified.
Proactive Measures Boards Should Take
Boards should respond quickly to such requests and should pass such requests to the affected shareholder or unit owner immediately so they are aware of the request and can provide information that could be relevant to supporting a claim that a property is a primary residence or otherwise exempt from the non-primary residence property surcharge. This is imperative because deadlines to contest notices are hard, and, in the event that they are missed, the right to contest primary residence status for the entire fiscal year is forfeited. Moreover, the clock for a contest starts running from the time the board receives the Notice of Determination, not from the date it is distributed to the shareholder. So, to the extent the board drags its feet in distributing the NOD, it exposes itself to liability to the “covered” shareholder for any loss arising from missing the deadline to contest the primary residence determination.
Unlike cooperatives where real estate taxes are paid at the cooperative level, condominiums do not face the same issue because each unit owner is taxed directly by the Department of Finance. Cooperative boards therefore, in effect, become a guarantor of each “covered” shareholder’s payment of the PAT Tax.
Cooperative’s may wish to consider amending their proprietary lease to define the PAT Tax as additional rent so that collection efforts can be effectuated through summary proceeding in landlord and tenant court. Without such amendment, cooperatives with shareholders failing to reimburse the cooperative for the PAT Tax may be required to make their collection efforts in supreme court, which can be more time consuming and costly than proceedings in landlord and tenant court.
As noted above, PAT has put cooperative boards in the position of being de facto guarantors of their non-resident shareholders’ tax obligations. There are two types of proprietary lease amendments which boards should consider adapting in order to mitigate this liability. The first would be an indemnification provision binding on all proprietary lessees compelling them to reimburse, as additional rent, the Apartment Corporation for all loss arising from their failure to pay any tax obligation to any governmental agency. Shareholders’ failure to indemnify the cooperative under this provision would subject them to non-payment eviction proceedings.
The second lease amendment would be a provision empowering the cooperative to satisfy any lien by any government agency against it by reason of a shareholder’s failure to satisfy any personal obligations to said governmental agency, and then charge back the amount so expended, together with interest and any attendant attorneys’ fees, to this shareholder as Additional Rent. Failure to reimburse would similarly subject the offending shareholder to a non-payment proceeding.
We will continue to monitor the situation with the non-primary residence property surcharge and its effect on condominium and cooperative boards.
If you need more information about the PAT Tax or have questions about how the PAT Tax applies to your situation, please contact the PAT Team.
Andrew B. Freedland at +1 212 592 1623 or [email protected]
Bruce A. Cholst at +1 212 592 1621 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.