NEW YORK — New York City Mayor Zohran Mamdani announced Thursday that the city has begun sending notification letters to owners of second homes valued at more than $5 million, alerting them to the rollout of a new annual tax surcharge known as the pied-à-terre tax.
The tax, enacted by the New York State Legislature as part of the FY2027 budget and signed in late May 2026, took effect on July 1. It targets non-primary residential properties in New York City with the goal of raising approximately $500 million per year for city services.
The Tax
The surcharge applies to covered properties that are not the owner’s primary residence. For one- to three-family homes, the threshold is a market value above $5 million. Co-ops and condos face lower valuation triggers based on assessed values.
Tax rates in the initial phase through June 2028 are tiered. One- to three-family homes are taxed at 0.8% to 1.3% of market value in brackets above $5 million. Co-ops and condos face rates between 4% and 6.5% of assessed value. The surcharge is added to existing property taxes.
Exemptions include properties used as primary residences, certain family-occupied units, and qualifying full-time rentals. The tax applies regardless of whether the owner pays New York City income tax.
Mayor’s Statement and Revenue Goal
If you have a second home in New York City worth more than $5M, check your mailbox when you’re back in the five boroughs, because you’ve got mail
Mayor Mamdani
He added that the city sent notification letters to property owners and framed the tax as necessary to support parks, libraries, and schools by requiring higher contributions from wealthy owners.
Governor Kathy Hochul backed the measure during budget negotiations, projecting annual revenue near $500 million from roughly 11,000 to 13,000 properties. Actual collections may vary due to exemptions, valuation disputes, and owner responses.
NYC Department of Finance will handle administration, including determinations of primary residence status and valuation appeals. Legal challenges are anticipated over assessment methods, particularly for co-ops and condos where assessed values often differ significantly from market prices.
The pied-à-terre tax sunsets in 2031 unless renewed. It forms part of efforts to address New York City’s budget gaps amid high spending on services, infrastructure, and other obligations.
Property owners who received letters should review them for specific calculations and consult tax advisors regarding exemptions or appeals. Official details are available through the NYC Department of Finance.
