Having an apartment in New York as the second home is going to become much more expensive. This is due to the new Pied-à-Terre Surcharge, an annual tax – in force since 1 July 2026 – intended for luxury residential properties that are not used as a main residence. The measure, approved in the budget of the State of New York 2026-2027, aims to hit the high-value apartments used only occasionally by the owners.
For many international buyers, including many Italians who own a house in Manhattan for work, holidays or family investments, it is an important change that could result in tens of thousands of dollars of additional taxes every year.
But what exactly is the Pied-à-Terre Surcharge? It is a suttassa that adds to the normal real estate taxes already due by the owners. It does not replace existing taxes, but represents an additional cost for those who own high-value properties and does not use them as a main residence. The law will remain in force until 30 June 2031, unless any prorogation by the state legislator.
The tax concerns the so-called covered owners, i.e. the owners of valuable properties that do not reside permanently in the house.
I am interested:
Proprietari di case unifamiliari o bifamiliari con valore superiore a 5 milioni di dollari.
Proprietari di appartamenti in condominio (condo) con valore fiscale DOF superiore a 1 milione di dollari.
Proprietari di cooperative (co-op).
Proprietari che detengono l’immobile attraverso LLC, trust o altre strutture societarie, purché ne controllino la quota maggioritaria.
The law does not concern those who use the property as a main residence. They are also excluded:
Gli immobili ancora in costruzione e non venduti dallo sponsor.
Le proprietà prive di certificato di agibilità.
Gli appartamenti occupati stabilmente da un familiare stretto o da un inquilino con contratto di almeno un anno che utilizza l’unità come residenza principale.
But how exactly will it work? The New York Department of Finance (DOF) will check the situation on January 5th each year. If at that date the property is not the main residence of the owner, a direct family member or a qualified tenant, it will scatter the survivor. To carry out the checks, the DOF may cross the data with the tax statements of the State of New York, verifying whether the address declared as residence coincides with the property concerned.
Many international buyers choose to buy through LLC or trust for tax, asset or privacy reasons. The new legislation expressly addresses this issue: being owner through a company or trust does not allow to avoid the tax. If the beneficiary or the parent company is identifiable, the tax obligation remains.
There are two separate calculation systems provided by law.
Fase 1: dal 2026 al 2028. In questa prima fase si utilizzano i valori fiscali del DOF, storicamente molto inferiori rispetto ai valori reali di mercato. Per questo motivo le aliquote previste appaiono elevate: servono a compensare una base imponibile artificialmente bassa.
Fase 2: dal 2028. Dal 1° luglio 2028 il sistema cambierà radicalmente. Le aliquote saranno più basse, ma il valore dell’immobile verrà determinato utilizzando prezzi di mercato comparabili. In molti casi il risultato finale potrebbe essere simile o addirittura superiore rispetto alla prima fase.
Let’s give an example. An apartment with a price of $5,995 million and three bedrooms on the Upper West Side has a DOF tax value of approximately $64,000. Since the tax value remains under the minimum threshold of 1 million dollars, in Phase 1 it would not be subject to the tax. From 2028, however, using the market value, the tax could reach approximately $48,000 a year. There would also be examples of cooperatives and houses of the super luxury but, for the moment, this exercise can already give an idea of how this structure is complex
Cooperatives are one of the most common forms of property in New York and require special treatment. In coops you do not buy the apartment directly, but a share of the entire building that gives you the right to occupy a specific housing unit. For this reason, the DOF does not attribute a tax value to each apartment, but to the building as a whole. The law therefore provides for a proportional calculation system based on the shares held by each owner.
A particularly important aspect is that the tax is initially charged to the cooperative itself. It will then be the Board to recover the amounts from the individual shareholders concerned, creating potentially new administrative responsibilities for buildings.
Owners who believe incorrectly assessing the property or classification of the residence may appeal. The disputes may concern both the value attributed to the property and the recognition of the status of main residence. Those who provide false documentation or misleading information risk a fine of up to 50% of the tax due. In addition, the DOF can carry out retroactive checks up to six years.
There are still some issues still pending. Although the law has been passed, some operational aspects must still be clarified by the implementing regulations of the Department of Finance.
Among the most discussed points:
Se la tassa verrà applicata sull’intero valore dell’immobile una volta superata la soglia prevista (cliff tax).
Oppure soltanto sulla parte eccedente la soglia (tassazione marginale).
Le regole per successioni ereditarie e trasferimenti di proprietà durante l’anno.
Il metodo definitivo con cui verranno determinati i valori di mercato nella Fase 2.
For those who already own a property in New York as a second home or are considering buying one it is advisable to consult a tax lawyer specialized in real estate New York before August 2026.
The first notices of the Department of Finance will be sent by the end of August and the time to submit any observations could be limited.
The new tax is certainly one of the most significant tax changes in recent years for the second luxury homes market in New York. For many international owners, immediately understanding their potential level of tax exposure will be essential to avoid surprises and plan the future investment.
L’articolo In the end the tax on second luxury houses comes from IlNewyorkese.
