NYC's Luxury Vacancy Tax: How Much Will You Pay?

Starting July 1, 2026, New York City will officially implement the "High-Value Non-Primary Residence Tax," an annual surcharge on high-value non-primary residences. This policy primarily targets high-value residences that meet valuation thresholds but are not used as primary residences, meaning that some high-end property owners will need to bear a new annual holding cost in addition to the regular property tax.

Although many media outlets refer to it as the "New York luxury home vacancy tax," it is not actually applied to all vacant homes, nor is it applied to all second homes. Instead, it is determined based on a combination of factors, including the type of property, the Bureau of Finance's valuation method, and the actual usage of the property.

Which properties are likely to be affected?

The property needs to meet two core conditions simultaneously:

1. Located in the five boroughs of New York City (Manhattan, Brooklyn, Queens, the Bronx, and Staten Island), and meeting the corresponding DOF valuation threshold;

2. It is not the primary residence of the owner, eligible family member, or tenant.

What is the "DOF valuation threshold"?

The New York City Department of Finance (DOF) determines that a property's market value must reach a certain threshold before it can be subject to the "non-primary residence surcharge." This valuation is not equal to the purchase price, the market listing price, or the taxable assessed value on the property tax bill.

Fiscal years 2026-2028:

• 1-3 household homes: DOF valuation reaches $5 million

• Condominiums or cooperative apartments: DOF valuation reaches $1 million

Reaching the valuation threshold does not necessarily mean that taxes must be paid. Taxes may only be levied if the property is not the primary residence of the owner, eligible family members, or tenants.

Common situations include:

• They primarily reside out of state or overseas, using their apartment in New York only occasionally.

• He owns multiple residences in New York, some of which are vacant for long periods or used only as vacation homes.

• The property is held by an LLC, company, or trust, but the actual occupant does not meet the criteria for principal residence;

• Although the property is furnished and occasionally inhabited, no one uses it as their primary residence.

  
  

Important note: **Being a non-New York resident does not necessarily mean you have to pay taxes, and LLC or trust holdings do not automatically require taxation.** Ultimately, it depends on the property value, ownership structure, and determination of the actual principal residence.

Furthermore, an individual cannot declare multiple primary residences simultaneously . Even with multiple properties, not every "owner-occupied" property qualifies for exemption.

How are tax rates calculated for 2026-2028?

The calculation is based on the market value determined by the New York City Department of Finance, not the purchase price of the property, nor the taxable assessed value on the property tax bill.

Property Types	Market value as determined by the New York City Department of Finance	Annual surtax rate
1 to 3 households	$5 million to $15 million	0.8%
1 to 3 households	$15 million to $25 million	1.05%
1 to 3 households	More than $25 million	1.3%
condominiums or cooperative apartments	$1 million to $3 million	4.0%
condominiums or cooperative apartments	$3 million to $5 million	5.25%
condominiums or cooperative apartments	More than $5 million	6.5%

⚠️ This is not a progressive tax. Once a property reaches the corresponding threshold, an additional tax will, in principle, be calculated on the market value of the entire property as determined by the New York City Department of Finance, according to the tax rate of the corresponding tax bracket.

For example, a condominium with a market value of $1.5 million as determined by the New York City Department of Finance does not qualify for the primary residence exemption:

$1.5 million × 4% = approximately $60,000 in additional taxes annually.

There will be further adjustments in 2028.

Starting July 1, 2028, Condos and Co-ops will switch to a new comparable transaction valuation method, with the threshold uniformly raised to $5 million and the tax rate adjusted to 0.8%–1.3%. Under current law, this additional tax will expire on June 30, 2031, unless it is extended thereafter.

In what situations can an exemption be granted?

The property may be exempt from taxation if it is determined to be the principal residence of any of the following individuals:

• The owner himself;

• The owner's spouse, children, siblings, parents, grandparents, or grandchildren;

• Tenants or legal subtenants who use the property as their principal residence;

• An individual who owns a majority interest in an LLC, corporation, or partnership that owns real estate;

• The sole beneficiary of the trust meets the relevant requirements.

  
  

If an exemption is obtained through renting, a genuine, independent rental agreement is usually required, along with proof that the tenant indeed uses the property as their primary residence. This may require providing:

• Valid lease;

• Tenant's tax filing address;

• Driver's license or ID card address;

• Utility bills, rent payment records, or tenant insurance;

• Other proof of accommodation.

  
  

What should I do if I recently receive a letter from the Finance Bureau?

The New York City Department of Finance stated that approximately 17,000 homeowners have received notices that they may be required to pay additional taxes, but receiving a letter or appearing on a supplemental valuation list does not necessarily mean that taxes will ultimately have to be paid.

If the property qualifies for an exemption, you must submit the required documentation. The deadline for applying for an exemption in 2026 has been extended to September 18, 2026. If you disagree with the DOF valuation, you will need to pursue a separate appeal process through the New York City Tax Commission.

Don't confuse it with "luxury home tax"

Comparison Projects	Vacant luxury home tax	Luxury home tax
Collection time	Collected annually	A one-time tax is levied upon completion of a property purchase.
Target	Non-primary residences that meet the threshold	Residential properties sold for over $1 million
Is it related to owner-occupied housing?	related	irrelevant
Main payer	Property owners	Buyer

In short:

Luxury home tax is based on the transaction price, while vacant luxury home tax is based on the property value and usage.

As New York's real estate policies continue to change, the cost of buying a home is no longer just the transaction price. Taxes, holding costs, and future policy changes will all affect asset allocation and investment returns.

ACRE closely monitors real estate policy developments in New York and New Jersey, providing clients with consultation on new developments, market analysis, and comprehensive home-buying services. Whether you are a first-time homebuyer, upgrading your home, or making a long-term investment, we will combine the latest policies and market trends to help you make a more comprehensive and rational home-buying decision.

If you'd like to know if your property might be affected by the new policies, or if you're considering buying a high-end home in New York, please contact ACRE for a personalized consultation.

This article is for general policy information only and does not constitute tax or legal advice. Whether a specific property is applicable should be determined by the New York City Department of Finance and professional tax and legal advice.