The New York City (NYC or City) Department of Finance (Department) has announced that the deadline for filing an exemption application to an initial non-primary residence determination under the City's new pied-a-terre tax has been extended to October 6, 2026, from September 18, 2026.¹

Background

New York City (NYC or City) enacted the new pied-à-terre tax in May 2026.² Since the enactment, the NYC Department of Finance (Department) has:

1. Adopted rules³ on the administration of the surcharge
2. Issued on July 24, 2026, a supplemental property assessment roll that included information on over 900,000 NYC residential properties, including properties that may be covered by the surcharge
3. Identified approximately 31,000 properties that may be subject to the surcharge
4. Launched an online surcharge exemption application portal for residential homes and condos and cooperative units
5. Set up a webpage that includes frequently asked questions, eligibility guidance and information regarding the documentation required to support an exemption claim

Tax Alert 2026-1674 (dated August 4, 2026) summarizes these developments (note, the supplemental roll is not discussed).

Additionally, a group of homeowners has challenged the legality of the City's actions related to the administration of the surcharge.⁴ (The homeowners are not challenging the validity of the new law.) Specifically, the homeowners are challenging: (1) the public distribution of a supplement roll that lists over 900,000 NYC homeowners' names, addresses and property values as "related to" the surcharge, and (2) the written notice sent to 17,000 NYC homeowners on the list who "may be subject" to the surcharge but who can apply for an "exemption." The homeowners are asserting that in issuing these two notices, "the City has arbitrarily and capriciously foisted onto [NYC] residents the burden of proving they are not subject to the [s]urcharge, instead of the City … discharging the City's own statutory obligation in the first instance to diligently assess and determine … the properties that are actually subject to the [s]urcharge." The homeowners are seeking a declaratory judgment that the supplemental roll and mailed notices are without legal effect and that the mailed notices do not constitute proper notice under the law and should be annulled and vacated. While Justice Wayne Ozzi of the New York State Supreme Court, Richmond County, issued a temporary restraining order (TRO) against the City prohibiting it from taking certain action related to the surcharge, an appellate court subsequently lifted that order, allowing the City to continue to implement the surcharge. A hearing in the case was held on August 31, 2026. As of the afternoon of September 9, 2026, a decision had not yet been issued by the court.

In its response to the legal challenge brought by several homeowners, the Department said that it "updated and clarified on its website that a property's appearance on the roll does not indicate that it is subject to the surcharge." The Department also noted that a majority of the properties on the supplemental roll would not be subject to the surcharge, stating that "only the approximately 17,000 properties to which [the Department] sent notices could potentially be subject to the surcharge." The Department said it sent updated letters to 4,400 property owners and 6,400 properties owned by entities or trusts for which the information available to the Department (such as 2025 tax returns) does not establish the use of the property as a primary residence and what information would be required to determine a property is not subject to the surcharge. The Department sent those updated letters before August 31, 2026.

The NYC Council has also held oversight hearings on the Department's implementation of the surcharge.

Extended surcharge exemption application deadline

The Department will determine whether a covered property is a primary residence, and taxpayers must refute adverse determinations by filing an appeal. This year, the Department had to make its initial determinations on primary residences and provide notice of such determination by August 30, 2026. Property owners who received a notification by mail indicating that the Department has initially determined their property to be a second home and believe the determination is incorrect have until October 6, 2026 (extended from September 18, 2026) or a date determined by the Commissioner upon showing "good cause" to appeal that determination by submitting a surcharge exemption application. To assist taxpayers with determining exemption eligibility, the Department has added an "exemption eligibility tool" to its non-primary residence property surcharge webpage.

Taxpayers should work closely with their tax advisors to evaluate the documentation needed to support a challenge to a non-primary residence determination. For the current tax year, taxpayers must first challenge a non-primary residence determination through the Department; however, beginning next year, taxpayers will generally have the option of either pursuing the non-primary residence determination challenge with the Department or combining both valuation and non-primary residence challenges in a single proceeding before the NYC Tax Commission. Cooperative apartment owners should be particularly mindful that only the cooperative shareholders corporation may challenge a non-primary residence determination for cooperative units. As a result, cooperative boards and shareholders should coordinate any challenge to residency use status and assessed value, so that all procedural requirements are met and available appeal rights are preserved.

Further, taxpayers should be aware that any documents or information submitted to the Department in connection with the surcharge are expressly excluded from New York's taxpayer secrecy protections and may therefore be subject to public disclosure. Accordingly, taxpayers should carefully review all submissions and consider redacting sensitive or confidential information to the extent appropriate and permissible before providing materials to the Department.

Implications

Taxpayers with potentially affected NYC residential properties, particularly those held through trusts, limited liability companies, partnerships or other estate planning structures, may want to consider reviewing ownership and occupancy arrangements and gathering documentation supporting primary residence status.

EY will continue to monitor the developments related to the surcharge, especially the ongoing litigation, and will issue follow-up Tax Alerts as warranted.