Key Takeaways
- New York City (NYC) pied-à-terre tax liability depends primarily on whether a qualifying person uses the property as a primary residence, not solely on ownership.
- Exemptions may apply to homes occupied by family members, tenants, majority owners of limited liability companies (LLCs) or qualifying trust beneficiaries.
- Owners must file exemption claims by Sept. 18, 2026, while valuation appeals — or combined exemption and valuation challenges — go to the NYC Tax Commission.
In response to our previous article on the new New York City non-primary residence property tax, commonly referred to as the pied-à-terre tax, and related press coverage, we received many questions about when the tax applies and how the exemption and appeals processes work. With the exemption application deadline extended to September 18, 2026, and a separate opportunity available to challenge the property’s valuation, affected owners should review their circumstances promptly to determine the appropriate filing path.
We are sharing 13 examples to illustrate how the tax may apply under a variety of common ownership structures. While each situation depends on its specific facts, these scenarios demonstrate that occupancy often matters more than the form of ownership. In many cases, the determining factor is not who owns the property, but rather whether it serves as the primary residence of a qualifying individual.
Examples:
Example 1 – NYC Resident with Two Apartments (Surcharge Applies)
David is a New York City resident who owns two Manhattan condominiums. He lives full-time in his Upper West Side apartment, which is his primary residence. He also owns a condominium in Tribeca that he uses only a few weekends each year. Although David is a New York City resident, the Tribeca condominium does not serve as anyone’s primary residence. Accordingly, that condominium would be subject to the surcharge if it exceeds the applicable valuation threshold.
Example 2 – Florida Resident with a Manhattan Pied-à-Terre (Surcharge Applies)
Susan permanently relocated to Florida several years ago but retained ownership of her Manhattan condominium. She visits New York periodically throughout the year, but the condominium remains vacant most of the time and is not occupied by any other individual as a primary residence. Since the condominium is used solely as a vacation property, it would be subject to the surcharge if it exceeds the applicable valuation threshold.
Example 3 – Florida Resident with a Manhattan Pied-à-Terre (Surcharge Applies)
Kathy permanently relocated to Florida several years ago but retained ownership of her Manhattan condominium, which she treats as her domicile for New York State/City purposes. However, she spends more than 183 days in New York City and is therefore considered a statutory resident for New York State/City income tax purposes. Since Kathy’s domicile remains Florida, the Manhattan condominium is not her primary residence for purposes of the surcharge, even though she is treated as a statutory resident for New York income tax purposes. Therefore, the condominium would be subject to the surcharge if it exceeds the applicable valuation threshold.
Example 4 – Parent Owns Apartment for Adult Child (Exempt)
Robert owns a condominium in his individual name. His adult daughter, Jane, has lived in the apartment continuously for several years. Jane considers the apartment her primary residence and reports that address on her New York State and New York City resident income tax returns. Although Robert owns the property, the law provides an exemption when the property serves as the primary residence of an immediate family member of the owner.
Example 5 – LLC Owned by Three Individuals (Exempt)
Tom, Jason and Helen own an LLC that owns a Manhattan condominium. Tom owns 45% of the capital or profits of the LLC, Jason owns 30% and Helen owns 25%. Tom and Jason use the condominium throughout the year as their primary residence while Helen does not. Since Tom and Jason collectively own a majority interest in the LLC which is defined as more than 50% of the capital or profits and they use the property as their primary residence, the property would qualify for an exemption.
Example 6 – LLC Owned by Three Individuals (Surcharge Applies)
Same facts as Example 5 except only Helen uses the condominium as her primary residence. Although she uses the condominium as her primary residence, she does not own a majority interest in the LLC. Therefore, the condominium would be subject to the surcharge if it exceeds the applicable valuation threshold.
Example 7 – LLC Owned by Parent; Child Lives in the Apartment (Exempt)
Jennifer owns 100% of an LLC that owns a Manhattan condominium. Jennifer resides in Connecticut, while her son occupies the apartment year-round as his primary residence. Even though the property is owned by an LLC, the law provides an exemption where the property serves as the primary residence of an immediate family member of the owner.
Example 8 – LLC Owned Luxury Apartment Held for Occasional Personal Use (Surcharge Applies)
Delaware LLC owns a luxury condominium in Manhattan valued at more than $5 million. None of the LLC’s members reside in the apartment, no family members occupy the property and it is not rented. Instead, the owners use it only occasionally while visiting New York. Since the property is not used as anyone’s primary residence, it would be subject to the surcharge if it exceeds the applicable valuation threshold.
Example 9 – Apartment Leased to an Unrelated Tenant (Exempt)
Carlos or an LLC owned by him owns a Manhattan condominium that is leased to an unrelated tenant under a one-year lease. The tenant occupies the apartment as her primary residence. Assuming the appropriate lease documentation and proof of residency are provided, the property would not be subject to the surcharge because it serves as the tenant’s primary residence.
Example 10 – Revocable Living Trust (Exempt)
Michael transferred his Manhattan condominium to his revocable living trust, of which he is the sole lifetime beneficiary, as part of his estate plan. If Michael continues to occupy the condominium as his primary residence after transferring it to his revocable trust, the transfer itself does not cause the surcharge to apply, provided appropriate documentation establishing his primary residence exists.
Example 11 – Irrevocable Trust with Sole Beneficiary (Exempt)
An irrevocable trust purchased a Manhattan condominium for Emily, who is both the trust’s sole current beneficiary and the sole occupant of the property. Emily has continuously used the apartment as her primary residence. If the appropriate documentation establishing her primary residence exists, the law provides trust-owned property qualifies for an exemption when occupied by the trust’s sole beneficiary.
Example 12 – Irrevocable Trust with Multiple Beneficiaries (Surcharge Applies)
An irrevocable trust with three named beneficiaries purchases a Manhattan condominium. One beneficiary occupies the condominium as his or her primary residence, while the other two beneficiaries do not. Since the trust has multiple beneficiaries, it does not satisfy the “sole beneficiary” requirement applicable to trust-owned property. Accordingly, the condominium would be subject to the surcharge if it exceeds the applicable valuation threshold.
Example 13 – Irrevocable Trust with Contingent Beneficiaries (Exempt)
An irrevocable trust owns a Manhattan apartment occupied by the grantors’ daughter, who has lived there continuously as her primary residence. The daughter is the trust’s current beneficiary. However, the trust agreement also names her parents as contingent beneficiaries in the event she predeceases them. Final Rules provide that contingent or future interests will not be considered in determining whether a trust has a sole beneficiary. Therefore, since the daughter is considered the sole beneficiary and uses the apartment as her primary residence, the law provides that this trust-owned property qualifies for an exemption.
Exemption/Appeals Process
If a taxpayer receives a letter that a property may be subject to this tax, an exemption application may be submitted to the New York City Department of Finance (Finance) by the newly extended date, September 18, 2026. However, if the taxpayer wants to appeal the valuation, such appeal has to be made to the New York City Tax Commission (Commission). If a taxpayer wants to both appeal the valuation and apply for an exemption that can only be done through the Commission.
Planning Considerations
Taxpayers who receive a notice from Finance should not assume the surcharge automatically applies. Finance’s initial determinations are based primarily on ownership records, which frequently do not identify family occupants, tenants, majority owners of business entities or trust beneficiaries. In many cases, taxpayers may qualify for an exemption by timely providing documentation establishing that the property is, in fact, someone’s primary residence. This is particularly important for properties owned through trusts and LLCs, where the ownership records alone often do not reflect the property’s actual use.
Contact Us
To discuss how these rules may apply to your property, please contact your PKF O’Connor Davies client service team or:
Alan S. Kufeld, CPA
Partner
akufeld@pkfod.com | 646.449.6319
Steven J. Eller, CPA, JD
Partner
seller@pkfod.com | 551.249.1836
Bhakti Shah, CPA, JD
Partner
bshah@pkfod.com | 908.956.0464