Pied-De-Tier Tax — What We Know

Disclaimer

This material is provided for general informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client or advisory relationship is created. Consult a licensed accountant or attorney before filing, contesting, or taking any action.

Overview

New York now taxes second homes for being second homes.

Signed into law May 27, 2026, effective July 1, 2026, sunsets June 30, 2031.

The Example That Actually Sold This Law

Ken Griffin, 220 Central Park South

Griffin bought his penthouse there for $238 million in 2019, still the most expensive home sale in US history.
Mamdani filmed his Tax Day announcement standing outside that building and said, on camera, “When I ran for mayor, I said I was going to tax the rich. Well, today we’re taxing the rich.” Citadel pushed back publicly and hinted at pulling its $6 billion NYC development in response.
Current DOF assessed value on that $238 million penthouse: about $9.4 million, roughly 4% of what he paid. Current annual property tax: about $516,000.
Apply Phase 1’s surcharge to that same $9.4 million assessed value and he owes roughly another $471,000 a year, pushing his total NYC property tax bill to around $987,000.
Once Phase 2 switches valuation to comparable sales in 2028 and his unit gets priced closer to what it actually sold for, that surcharge alone could run into the millions annually.

The entire argument for the law, in one apartment

A $238 million home taxed, until this year, like it cost $9.4 million.

Who It Hits, If Not Your Primary Residence

Class 1: one, two, or three family homes valued over $5 million.
Class 2: co-op units valued over $1 million.
Class 2: condo units valued over $1 million.

Not Covered

Rental apartment buildings, commercial properties, hotels, vacant land.
New construction without a certificate of occupancy, unsold sponsor units.
Condos with more than three units held under the same ownership.

The Rates

Phase 1 — July 1, 2026 through June 30, 2028

Condo / co-op — $1M–$3M assessed value 4.0%

Condo / co-op — $3M–$5M assessed value 5.25%

Condo / co-op — above $5M assessed value 6.5%

1–3 family home — $5M–$15M market value 0.8%

1–3 family home — $15M–$25M market value 1.05%

1–3 family home — above $25M market value 1.3%

Phase 2 — July 1, 2028 through June 30, 2031

Every property type — $5M–$15M comparable sales value 0.8%

Every property type — $15M–$25M comparable sales value 1.05%

Every property type — above $25M comparable sales value 1.3%

DOF switches from assessed value to actual comparable sales here. This transition matters more than the Phase 1 rate.

The 2028 Appraisal Switch

Current method: co-ops and condos are assessed using a rental income comparison, not sale value. Real Property Tax Law Section 581.
Citywide average assessed value under this method: about 18% of market value for condos, 23% for co-ops.
Ultra luxury units run lower. Griffin’s penthouse: about 4% of market value.
Phase 1 rates (4.0% to 6.5%) apply to this reduced assessed value.
July 1, 2028: valuation method changes to comparable sales value instead of rental income comparison.
Phase 2 rate (0.8% to 1.3%) is lower, but applies to a much larger base, potentially 5 to 20 times the current assessed value depending on the unit.
Griffin example: Phase 1 surcharge on his $9.4 million assessed value is about $471,000 a year. Phase 2 surcharge on a value closer to his $238 million purchase price could run into the millions per year.

What Counts as a Primary Residence

Occupied more than half the year, over 183 days, as of January 5 of the prior fiscal year, by:

A covered owner.
An immediate family member: spouse, child, sibling, parent, grandparent, or grandchild.
A lessee under a genuine arm’s length lease of at least one year.

LLC and Trust Ownership

LLC, partnership, or corporation: the majority interest holder is the covered owner.
No single majority holder among several minority owners: no one is treated as covered owner, and the property is subject to the surcharge regardless of who lives there, unless an arm’s length lessee occupies it as their primary home.
Revocable trust with one beneficiary: that beneficiary is the covered owner.
A trust owning an LLC: not addressed by the statute. Genuinely unresolved, expect this to get litigated.

Key Dates

July 1, 2026 Phase 1 takes effect.

August 30, 2026 Statutory date for DOF to notify affected owners. Owners may contest with proof of primary residence.

January 1, 2027 First surcharge payment due.

July 1, 2028 Phase 2 begins, valuation shifts to comparable sales.

June 30, 2031 Scheduled sunset, unless the legislature renews it.

Audit window DOF can audit any primary residence certification for up to 6 years after you file it.

Penalties

Up to 50% of the surcharge if DOF finds your documentation was inaccurate or misleading, filed negligently or in bad faith.
Splitting a condo into more than three units in bad faith to dodge the tax carries its own penalty.

Where the rollout actually stands, late August 2026

DOF moved early: notices already went out in late July to roughly 17,000 owners off a supplemental roll of about 960,000 properties. Being on that roll does not mean you owe the tax. Three homeowners sued the city August 7, arguing the rollout wrongly flagged primary residences and shifted the burden of proof onto owners. A judge issued a temporary restraining order August 10, ordering the roll taken down and deadlines paused. The city appealed within hours, which stayed the order. Rollout and deadlines are back in effect. Next hearing: August 31, 2026. Owner deadline to apply for an exemption right now: September 18, 2026. This is moving in real time. Confirm current status before acting on any date here.

This Is a Nuanced, Detailed Issue

This is very much a moving target. Myself and the industry are grappling to truly understand it and its implications. There may be factual inaccuracies in what I wrote above, but to date, this is my understanding of the situation. Consulting with your legal and accounting team is advisable.

Azari

Find Real Estate

Licensed Real Estate Salesperson | FIND | The Moof Team

azari@findrealestate.com | 718.414.9446 | www.behrangazari.com

Sources

Updates, Verified August 21, 2026

DOF mailed notices to roughly 17,000 owners in July, off a published roll of nearly 1 million properties. Source: Gothamist, HGAR.
Three homeowners sued the city August 7, represented by attorney Randy Mastro. Suit claims DOF failed to properly identify owners holding property in trusts or LLCs. Source: Inman, Fortune, CNN.
Staten Island Supreme Court Justice Wayne Ozzi issued a temporary restraining order August 10. Source: CPA Practice Advisor, otdowntown, Bloomberg.
Brooklyn Appellate Division Justice Phillip Hom stayed that order August 13. Source: CPA Practice Advisor, otdowntown.
Next hearing on the underlying case: August 31, 2026. Source: CPA Practice Advisor, otdowntown.
Exemption deadline extended from August 21 to September 18, 2026. Source: Inman, otdowntown.
As of August 14, DOF had received nearly 4,000 exemption appeals. Source: CPA Practice Advisor.
City Council held a hearing August 18. The administration submitted written testimony instead of appearing, citing the litigation. One council member cited actual notices showing surcharges of $43,000 and $82,000. Source: HGAR.

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