Recently New York City Imposes Pied-a-Terre Tax on Nonresident Homeowners
There Has Been Great Controversy of the New Tax on Non-Resident Homeowners
We will discuss this tax below to demystify it:
These are the Main Factors in the Covered Owners and Property
The Pied-a-terre tax is imposed on homeowners of certain residences located in New York City when the home is not a primary residence. Trust beneficiaries, majority partners, shareholders or members of partnerships, corporations or limited liability companies holding New York residences could also be impacted by the tax.
The tax is not applied when one or more owners, their immediate family members, lessees, or sublessees (with a lease agreement for one or more years) use the home as a primary residence. Only one home of a given individual can be considered his or her primary residence.
Impact on Trust and Estates
With respect to a residence owned by a trust, the tax will be imposed (assuming the valuation thresholds described below are met) unless there is only one beneficiary and that sole beneficiary uses the home as a primary residence. The law makes no reference to estates holding New York residences, so it is unclear how the tax will be imposed when estates hold such property, whether or not it was the decedent's primary residence.
There are currently no regulations issued by the New York City Department of Finance to clarify the ambiguities.
How the Tax Works
The pied-a-terre tax applies in two phases. Between July 1, 2026, and July 1, 2028, the tax covers single-family and one-to three-family homes with market value that is $5 million or more.
Therefore, there is a different standard.
Contact us to discuss if tax applies to your situation and the appeal process to preserve your rights.
This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client.
For further information please contact me at www.kmckernanlaw.com kevin@kmckernan.com or 718-317-5007.