Recent headlines about NYC's new pied-à-terre tax have created significant confusion, particularly around the widely cited $1 million threshold.
For the initial phase of the law (July 1, 2026 through June 30, 2028), condos and co-ops will generally be evaluated using existing NYC Department of Finance (DOF) market values rather than actual market value or purchase price. Because DOF values are often substantially lower than actual market values, many condos and co-ops with market values below approximately $5 million may not be impacted during Phase 1.
Implementation Timeline
Phase 1 (July 1, 2026 – June 30, 2028)
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Condos and co-ops evaluated using existing DOF market values
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Tax generally applies to condos and co-ops with a DOF market value above $1 million
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Tax rates range from 4% to 6.5%
Phase 2 (Beginning July 1, 2028)
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NYC is expected to transition condos and co-ops to a comparable-sales valuation system that more closely reflects market value
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Threshold increases to $5 million for covered properties
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Tax rates decrease to 0.8%–1.3%
The surcharge generally applies to certain residential properties that are not used as a primary residence, including condos, co-ops, and one- to three-family homes. Primary residences, qualifying family residences, and apartments leased to tenants as their primary residence under qualifying long-term leases are generally exempt.
While the law has been enacted, many implementation details remain unresolved, and additional guidance from the NYC Department of Finance is expected in the coming months.
Luxury Market: Manhattan’s luxury market stayed active last week, with 36 homes priced at $4 million and above entering contract. In the last 14 weeks, the luxury market has averaged 34 contracts per week, totaling over $4 billion in sales. 23% of these deals were at $10 million and above.
Rental Market: The rental market continues to break records. The median monthly rent reached an all-time high of $5,099 in April 2026, and early indications suggest May’s numbers will have set another record. Over the past month, we’ve seen sharp rent increases, multiple-offer situations, and bidding wars across the market at a level rarely seen in recent years.
We have also personally seen multi-way rental bidding wars where one bidder ultimately offers to buy the apartment because the economics of renting no longer make sense compared to buying. This is especially apparent in the $4 million-plus category, where renters are not only questioning astronomical rents, but also their long-term housing security. Questions like “Will the landlord renew me?”, “Will I be forced to move?” and “Will I be able to find a comparable home?” are increasingly becoming a source of stress for renters at the top tier of the market.
2026 Real Trends Verified: We are pleased to share that for the 6th year in a row our team has been included in Real Trends Verified, honoring the top 1.5% of agents in the country. We are incredibly grateful for your continued trust in our expertise and your loyalty to our business. Your support makes it possible for us to provide a seamless and successful experience to anyone looking to embark on their own real estate journey. Thank you for helping us achieve this tremendous milestone.
Check out our video post here on how timing is more important than price when purchasing.
As always, please reach out with any questions.
