New York Governor Hochul signed the Pied-à-Terre Tax Law into law on May 28, 2026, as part of the 2026-2027 New York State Budget.
The law, which took effect on July 1, 2026, imposes an annual surcharge on residential properties in New York City not used as the owner’s primary residence.
Properties identified as “luxury second homes” under the legislation are subject to the new annual charge, referred to as the PAT Tax.
The legislation is projected to generate $500,000,000 in annual revenue, targeting New York City’s substantial $5,400,000,000 budget deficit.
Property owners subject to the law are required to either file for exemptions or pay the applicable PAT Tax, with no middle ground available under the current framework.
Cooperative shareholders are also caught within the law’s reach, as cooperative shares tied to units in New York City cooperative buildings are classified as real property under the PAT Tax Law.
The New York City Department of Finance has already begun sending notices to some cooperative corporations identifying shareholders who may carry PAT Tax filing obligations.
Broadly, shareholders who own two or more residences including one outside New York City, hold a New York City residence valued above $5,000,000, and occupy that residence for fewer than 183 days during the tax year face filing requirements under the law.
The New York City Department of Finance calculates the value of cooperative shares for a specific unit using a formula based on that unit’s share allocation within the building.
Cooperative boards and managing agents may also face some degree of responsibility under the PAT Tax filing requirements, extending the law’s reach beyond individual shareholders.
Legal experts advise that any owner who receives a notice from the New York City Department of Finance should contact an attorney before responding, rather than attempting to handle the matter without professional guidance.
Owners should gather documentation including proof of residency, ownership records, occupancy information, and any materials that could support an exemption or challenge to the tax liability.
A provisional pause on elements of the law’s enforcement has been noted, though this pause is explicitly not to be interpreted as a repeal of the legislation itself.
Given the law’s complexity and the financial stakes involved, seeking counsel well-versed in PAT Tax Law developments is strongly recommended to preserve rights and ensure compliance.