Note: This alert reflects guidance and litigation developments available as of August 18th, 2026.
- In an accelerated process, New York City recently published proposed regulations governing the supplemental tax on second homes in New York City.
- After a brief comment period, the Department of Finance adopted final rules in July. Implementation of the surcharge remains subject to litigation, challenging the City’s rollout and notice process. Although a trial court temporarily restrained aspects of the rollout, the City’s appeal has allowed implementation to continue for now, pending further proceedings. Taxpayers should continue to monitor the litigation and applicable deadlines.
- The rules address issues around covered properties, covered owners, evidentiary standards for primary residences, and procedures around appeals.
Background
As a part of the FY 2027 Budget signed by Governor Hochul earlier this year, the legislature authorized a new tax to be assessed on second homes located in the five boroughs of New York City. You can read our analysis of the legislation here: New York Enacts New NYC Pied-à-Terre Tax in FY 2027 Budget. New York City has now promulgated final regulations governing the implementation of the tax.
The Regulations
The City of New York has adopted regulations, effective immediately, with respect to the pied-a-terre tax, found in Chapter 62 of Title 19 of the Rules of the City of New York that will govern the implementation of the tax.
Corporate Owners
19 RCNY § 62-02 addresses corporate ownership of covered properties (which include condominiums, cooperatives, and single-family homes). The regulation provides that corporations, partnerships, and limited liability companies must own an undivided fee interest in the property to be considered for purposes of the covered owner analysis. Likewise, for shareholders, partners, or members to be considered covered owners, they must, either individually or jointly, own a majority interest in an entity that owns an undivided fee interest or all the coop shares affiliated with a particular unit. Shareholders, partners, or members who qualify under this rule would avoid the impact of the tax if the underlying real property were the primary residence of those holding a majority interest in such an entity.
Forvis Mazars Insight: As a threshold matter, real property interests divided among multiple corporations, partnerships or limited liability companies means that the owners of those entities cannot be considered covered owners under the regulations. Additionally, this language renders tiered ownership structures ineligible for covered owner status, as the ultimate owners of the top-tier entity would not be the owners of an entity that held an undivided fee interest (or all the shares of a coop).
Primary Residency
A critical consideration for taxpayers who are considered covered owners under the law is whether the underlying real property, assuming it meets the value thresholds to qualify as a covered property under the law, will not be subject to the tax because it is the owners’ primary residence as of the taxable status date, which is January 5th. The regulations require that the Department of Finance (the “Department”) make annual initial determinations as to whether covered properties do not qualify as primary residences. For the first tax year, the Department published an addition to the assessment rolls identifying properties that may be subject to the surcharge in late July.
The regulation mandates that the Department will make a determination that a covered property is a primary residence if the covered owner has filed a state or federal tax return indicating that the covered property was the covered owner’s permanent home address, if the covered owner received a school tax relief (STAR) credit under § 606 of the New York Tax Law, or if the covered property was exempt under certain provisions of the New York Real Property Tax Law. The Department is required to provide notice of primary residence status to covered owners by February 15th; however, the initial notices for the first year of the tax will be transmitted by August 30th, 2026.
Appeals Process and Evidentiary Standards
The owner of a covered property, pursuant to 19 RCNY § 62-06 can appeal to the Department of Finance an adverse finding on primary residence status within thirty (30) days of receiving the notice (or within thirty (30) days of the surcharge appearing on the assessment rolls if the owner did not receive the notice). In order to prove that the covered owners used the property as a primary residence, they can provide (via the electronic portal designed to handle the appeals) either a copy of their most recent federal or state tax return indicating that the covered property was their permanent home address. In the alternative, they can provide copies of two of the following documents to support their primary residence claim: a driver’s license, learner’s permit, or non-driver identification card; a voter identification card issued by the New York City Board of Elections; or other proof acceptable to the Department. In the event that a covered owner is claiming that the covered property is the primary residence of an immediate family member, the covered owner can either provide copies of birth certificates, an affidavit from the covered owner and the immediate family member confirming the relationship, or a marriage certificate.
For those covered owners claiming exemption because the property is being rented, the covered owner can provide an unexpired lease or sub-lease (at arm’s length terms) and one additional rental document. If the arrangement is month to month, the regulation requires an affidavit from each party confirming the lease or sublease and two additional rental documents. “Additional rental documents” are defined as, “…a utility bill in a lessee’s or sub-lessee’s name issued within one year prior to the date of submission, an unexpired renter’s insurance policy that such lessee or sub-lessee is party to, or proof of rental payment to the owner of a property.”
In situations involving corporate or trust ownership, evidence required to prove primary residence status would include appropriate corporate or trust documents, such as operating agreements, articles of incorporation or the trust itself, as well as affidavits confirming the entity owner or trust beneficiary’s relationship to the entity or trust.
New York Administrative Code Section 11-3206(b) authorizes challenges, before the New York City Tax Commission involving surcharge-related market value determinations and determinations in certain circumstances, primary residence status. The regulations also contemplate appeals to the initial determinations issued in late July to the Department of Finance strictly based upon primary residence status. Initially, this deadline was August 21st, but the mayor extended it to September 18th. The regulations are the subject of ongoing litigation, and these deadlines may be stayed; we will update this as events warrant.
Additionally,19 RCNY Section 62-06(e) forecloses the possibility of multiple challenges by disallowing consideration of an appeal related to primary residence status if such challenge has already been brought before the Tax Commission.
Forvis Mazars Insight: Taxpayers should carefully consider forum selection and timing. Under current Tax Commission guidance, appeals involving both market value and primary residence issues must be filed by March 1, 2027 (Tax Class Two) or March 15, 2027 (Tax Class One). Taxpayers who first pursue a residency determination through DOF may appeal an adverse final DOF determination to the Tax Commission by the applicable March deadline or within 30 days of the DOF’s final determination, whichever is later. However, any market value challenge must still be filed by the applicable March deadline. Because only one Tax Commission surcharge appeal may be filed for a property each year, taxpayers should evaluate their strategy carefully where both market value and primary residence issues are involved.
How Forvis Mazars Can Help
We can help you consider the impact of this tax on your property, as well as assist you in any appeals as the result of an adverse finding by the Department. Please reach out to a professional at Forvis Mazars.