New York City has introduced a new property tax surcharge for certain high-value residential properties that are not used as a primary residence. The surcharge begins with the 2026–2027 tax year. If you own a second home, investment unit, or other non-primary residence in New York City, this new tax may affect you. The New York City Department of Finance (“DOF”) has sent notices to approximately 17,000 property owners, and the current deadline to respond is October 6, 2026.

Could this apply to your property?

The surcharge may apply if the property is not used as a primary residence and its market value meets the applicable threshold. The key questions are the type of property, the value assigned by the DOF, and how the property is actually used.

Value thresholds

For the 2026–2027 tax year, the surcharge may apply to:

• One-, two-, and three-family homes with a market value of $5 million or more as set by the DOF.
• Condominiums and co-ops with a DOF market value of $1 million or more as set by the DOF.

The DOF value may be different from what your property is worth

The threshold is based on the DOF’s market value, not the property’s purchase price or the price it might command in a sale. The DOF uses different valuation methods depending on the type of property. As a result, the DOF value may be significantly lower than conventional fair market value.

A primary residence may be exempt

The surcharge generally does not apply if the property is used as a primary residence by a qualifying person. This may include the owner, certain family members, a tenant or subtenant, certain owners of an entity that holds the property, or the beneficiary of a trust that owns the property. Holding the property through an LLC, partnership, corporation, or trust does not by itself determine whether the tax applies. If you received a DOF notice, that does not necessarily mean you owe the surcharge; you may be able to establish that an exemption applies.

What could the surcharge cost?

The rate depends on the type of property and its DOF market value:

Example: A Manhattan co-op with a conventional fair market value of about $10 million could have a DOF market value of approximately $1.83 million. At the 4.00% rate, the annual surcharge would be about $73,000, assuming no exemption applies.

What should you do if you received a notice? 

• Confirm whether the property is actually subject to the surcharge and whether a primary residence exemption may apply.
• Act promptly. The current deadline to respond to a DOF notice or apply for an exemption is October 6, 2026.
• If the surcharge applies, it is due January 1, 2027, and will appear on the regular property tax bill.
• Different procedures apply if you want to challenge the surcharge determination or the DOF’s underlying valuation of the property.

Legal challenges

The surcharge is being challenged in a pending New York court case. The case may affect how the surcharge is administered, including who bears the burden of showing whether the tax or an exemption applies. For now, property owners should proceed under the current rules and applicable deadlines.

Key Takeaways 

• If you own a non-primary residence in New York City, determine whether its DOF market value meets the applicable threshold.
• Do not assume that a DOF notice means the tax is owed. A primary residence exemption may apply depending on how the property is used.
• Ownership through an LLC, partnership, corporation, or trust does not by itself determine whether the surcharge
• Use the DOF market value, not purchase price or conventional fair market value, when evaluating the threshold and potential surcharge.
• Rates range from 0.80% to 6.50%, depending on property type and DOF market value.
• If you received a notice, October 6, 2026 is the current deadline to respond or apply for an exemption.

The information contained in this article is general and informational in nature and does not constitute legal advice. Each situation is particular and requires individualized analysis. If you have questions about how this surcharge could affect your property, please feel free to contact us.