This guide is for a Manhattan co-op or condo owner moving to Westchester who has to decide what to do with the apartment. It is general information, not legal or tax advice. Confirm your own situation with a New York tax attorney and your accountant before you act.

Where the pied-a-terre tax stands on October 21, 2026

The surcharge is law and the first bills are due January 1, 2027, but the city’s rollout is under appeal and two lawsuits challenge the law itself, so parts of it could still change.

Part HH of the 2026-2027 budget bill, S.9009-C / A.10009-C, signed on May 28, 2026 as Chapter 59 of the Laws of 2026, added Article 30-C to the State Tax Law (sections 1350 to 1356) and a matching chapter 32 to title 11 of the city’s Administrative Code. It applies to city tax years beginning on or after July 1, 2026, and expires on June 30, 2031 unless the Legislature extends it. The Department of Finance (DOF) calls it the non-primary residence property surcharge.

• May 28, 2026 The Governor signs S.9009-C.
• July 14, 2026 DOF adopts its rules, 19 RCNY chapter 62, effective immediately.
• July 24, 2026 DOF publishes a supplemental market value roll. About 17,000 homes received initial determination letters, DOF later told the City Council.
• August 3, 2026 An emergency DOF rule moves the first deadline to answer a letter to September 18, 2026.
• August 18, 2026 Two City Council committees hold a hearing on the rollout. DOF submits written testimony only, citing litigation.
• September 29, 2026 A Staten Island judge, in a homeowners’ lawsuit over the rollout, orders the city to cancel the letters and restart. The city invokes a stay, keeping the surcharge on January 1 bills (CBS New York, September 29, 2026).
• October 5, 2026 The city files its appeal (The Real Deal, October 6, 2026), and the Appellate Division in Brooklyn keeps the September 29 order on hold and says it will rule by November 10, 2026 (Habitat Magazine, October 9, 2026).
• October 13, 2026 DOF’s exemption deadline for tax year 2026-27 passes.
• January 1, 2027 2026-27 surcharges are due on that day’s property tax bill, per DOF.
• March 1, 2027 NYC Tax Commission surcharge appeal deadline for tax years 2026-27 and 2027-28 for Class Two property; March 15, 2027 for Class One.
• July 1, 2028 Phase two begins: a $5 million threshold for all covered property, with co-op and condo values set by a method that considers comparable sales.
• June 30, 2031 The law expires unless extended.

What is settled

The thresholds, rates and primary-residence test are in the statute and have not been amended, although two lawsuits listed below challenge the statute itself. The rollout lawsuit did not challenge the tax itself, as Habitat Magazine reported on October 9, 2026. For 2026-27, an owner who disagrees with DOF’s value can still file form TC107 with the NYC Tax Commission.

What is not settled

• The appeal. If the September 29 order stands, the city must cancel the July letters and send new, individualized notices, as CBS New York reported. The effect on 2026-27 bills is not yet known.
• Two lawsuits filed against the State in late September 2026 challenge the surcharge’s constitutionality (The Real Deal, October 6, 2026). No ruling had been reported by October 21, 2026.
• How DOF will measure phase two values, which its rule has not yet addressed.
• The 2027-28 notices. DOF’s rule calls for them by February 15, 2027, with 30 days to respond, but the notice process is what the rollout lawsuit challenges, so it could change.

What the law taxes, and how the city measures value

For 2026-27 and 2027-28, a co-op or condo unit is in range if DOF’s market value for it is $1 million or more, and the rate then applies to the entire value, not only the part above $1 million.

Bands are as written in Tax Law 1350 and 1353. DOF’s table words the edges slightly differently, which matters only at exactly $3 million or $5 million for a co-op or condo, or exactly $15 million or $25 million for a home. Unsold sponsor units and buildings still waiting for a certificate of occupancy are excluded.

The DOF value is not your sale price

The $1 million test uses the value DOF carries for property tax, and for co-ops and condos that number is not a sale price: state law has DOF value them by capitalizing the income of comparable rental properties, as the Tax Commission describes it. DOF’s own FAQ says a co-op or condo it values at $1 million or more “is comparable to a single-family home valued at $5 million or more.” For a condo, the statute uses DOF’s value for the unit. For a co-op, it imputes one: the building’s DOF market value times your apartment’s shares, divided by the corporation’s total shares. Your managing agent has both share counts.

The whole value is taxed, and abatements do not reduce it

DOF’s adopted rule says that once a unit meets the threshold, “the entirety of the property’s value is subject to the surcharge.” The statute bars any property tax abatement, credit or exemption, such as the co-op and condo abatement or STAR, from reducing it, and DOF says the law does not allow proration for part of a year.

Hypothetical round values with the statutory rate applied to the whole value, for 2026-27 or 2027-28. This is not an estimate of anyone’s bill.

From July 1, 2028, the measure changes

From 2028-29, the statute puts all covered property, co-ops and condos included, in range only at a phase two value of $5 million or more, set for co-ops and condos by a method that considers sales of comparable units, at 0.8 to 1.3 percent. Read as written, a unit inside the $1 million DOF test today could fall outside the surcharge from 2028-29 if its sales-based value is under $5 million. DOF has not published its phase two method and the Legislature can change the law, so treat that as the statute’s text, not a forecast.

Primary residence is the test, and January 5 is the day

The surcharge does not ask where you pay income tax. It asks whether, on January 5 before the tax year, the apartment was the primary residence of an owner, an owner’s immediate family member, or a tenant under an arm’s-length lease of at least one year.

The definition is in Tax Law 1351, applied by DOF’s rules:

• Owner. A natural person who lives there as a primary residence. In a co-op, that is the tenant-stockholder.
• Immediate family member. A spouse, child, sibling, parent, grandparent or grandchild of an owner. DOF calls the list exhaustive.
• Tenant. A natural person, not a company, living there under a bona fide lease of at least one year, at fair market rent and not entered into primarily to avoid the surcharge.
• Entities and trusts. The statute also counts the majority owners of an owning LLC, corporation or partnership, and the sole beneficiaries of an owning trust. If you hold the apartment that way, ask your attorney.

January 5 is the taxable status date. The status on January 5, 2026 governs 2026-27, and the status on January 5, 2027 governs 2027-28, the tax year from July 1, 2027 to June 30, 2028. DOF’s rule evaluates status “as of the taxable status date for each fiscal year,” and in adopting it DOF declined to count a lease signed shortly after January 5 or a buyer who has not yet moved in. DOF also says a person can have only one primary residence.

To prove primary residence, DOF’s exemption page asks for the most recently filed federal or state tax return or DMV identification showing the address; a tenant adds the lease and a utility bill, renter’s insurance or proof of rent. DOF can also weigh whether an owner was there a majority of days in a calendar year, can audit submissions for six years, and can impose a penalty of up to 50 percent of the surcharge for inaccurate documents filed negligently or in bad faith.

Why your income tax status is not the answer

The enacted law has no exemption for New York City income taxpayers. A state resident return listing the apartment as your permanent home is evidence the statute names, nothing more, and DOF said in adopting its rule that a second city home is not exempt because its owner lives elsewhere in the city. After a move to Westchester, your state return will normally list the house as your permanent home address, so it will no longer point to the apartment as your primary residence.

Keeping the apartment can also matter for income tax. According to the State Department of Taxation and Finance, you are a New York City resident for income tax if your domicile is the city, or if you keep a permanent place of abode there and spend 184 days or more in the city, and a city domicile changes only on “clear and convincing evidence.” The two tests are written differently, and meeting one does not settle the other, but the statute lets the city and the State tax department exchange the records each holds (Tax Law 1356). Ask your accountant how both apply to you.

Co-ops and condos are valued and billed differently

Co-ops and condos face the same thresholds and rates, but a co-op’s surcharge runs through the building, which makes it a board matter as well as yours.

• Billing. A condo’s surcharge goes on the unit’s own statement of account. A co-op’s goes on the building’s account, and the corporation must collect it from the shareholder.
• Notice. A co-op must pass a notice of surcharge to the shareholder “as soon as practicable.”
• Exclusion. Proof that one co-op apartment is a primary residence excludes only that apartment.
• Liens. The surcharge, penalties and interest are a lien on the property. DOF suggested co-ops could amend their proprietary leases to allocate the charges; ask whether yours has.

Keep, rent or sell: what the surcharge changes in each

Below the threshold, the surcharge does not change the decision. At or above it, each option turns on one question: who will be living there on the next January 5?

Selling: the January 5 after you move out is the date to beat

Suppose you move to Westchester in the fall of 2026 and the apartment is empty while it is listed. On January 5, 2027 it is no one’s primary residence, so at a DOF value of $1 million or more it is exposed to the whole 2027-28 surcharge, even if it sells in February. A closing before January 5, 2027, to a buyer who lives there by that date, avoids that. If you are still living there on January 5, 2027 and move in the spring, the next status date falls under the phase two rules.

DOF says the surcharge is imposed on the property, not the owner, and that buyers and sellers “may structure their transactional documents to allocate the risk.” Because the surcharge is a lien, the buyer’s attorney may ask about notices and surcharges for the years you owned the apartment, and in a co-op, ask the managing agent early what the corporation will require at closing. In Ed’s experience, what people most need to understand about a Manhattan co-op sale is how long it takes and what the board expects, and that is what has to fit before a January 5. Our guide to how long it takes to sell a co-op in Manhattan walks through each stage, seller costs are in our guide to who pays transfer tax and the mansion tax in NYC, and you can request a valuation of your New York City apartment.

Renting: the lease has to be real, a year long and in place on January 5

Every condition must be met on January 5: a natural person living there as a primary residence, under a bona fide, arm’s-length lease of at least one year at fair market rent. A token rent to a friend does not qualify. In a co-op, the proprietary lease, house rules and board decide whether you can sublet at all, so read them before you count on rental income; in a condo, check the bylaws and any right of first refusal.

Keeping it: price the surcharge in, every year

Keeping the apartment as a second home is a legitimate choice, and at or above the threshold a more expensive one. Add the surcharge to maintenance or common charges and property taxes for each year it is not a primary residence on January 5, and weigh the 2028 change, the 2031 expiration and your income tax residency.

If you are also deciding the order of the two transactions, read our guide to selling a Manhattan apartment and buying in Westchester at the same time.

What to ask your attorney and your accountant

Bring these to a New York tax attorney and your accountant before you list, sign a lease or decide to keep the apartment.

1. What is DOF’s market value for my unit, and for a co-op, my share count out of the total?
2. Who will be living in the apartment on the coming January 5, and what will prove it?
3. If I sell, how will the contract handle a surcharge for a year I owned it?
4. If I rent, does my lease meet the statute’s tests, and does my building allow it?
5. How does keeping the apartment affect my New York City income tax residency?
6. If I receive a DOF notice, do I answer DOF or file form TC107 with the Tax Commission, and by when?
7. Has the Appellate Division ruled, and has DOF changed its process since October 21, 2026?

Frequently asked questions