On 4 November a state appeals court threw out the lawsuit that had held up New York City's surcharge on homes that are nobody's primary residence. The four judges of the Appellate Division, Second Department, ruled unanimously that the seven homeowners who sued had shown no concrete harm from the city's notices, and wrote that lawmakers must have expected the list of recipients would not be “exact or flawless.” The court did not rule on the tax itself, and other challenges, including one in Suffolk County, are still pending. The Department of Finance has until 15 November to mail the bills, and the first payment is due on 1 January 2027.
Mayor Mamdani proposed the surcharge, and it passed as part of the state budget Governor Hochul signed in May. The city mailed about 17,000 notices to owners whose records did not show a primary residence, and Gothamist reports that more than 8,800 exemptions have been granted. The deadline to apply for one this year was 13 October. Mamdani says the tax will raise $500 million a year. The comptroller's office, working in April from rate schedules in earlier bills, found about $500 million from a little over 11,200 properties before adjustments, and $340 million to $380 million after allowing for rented units and owners' responses.
Until June 2028 the surcharge runs on two schedules. A condo or co-op unit pays 4% a year once the Department of Finance values it at $1 million, 5.25% from $3 million and 6.5% from $5 million. A one- to three-family house pays 0.8% from $5 million, 1.05% from $15 million and 1.3% from $25 million. Apartments get the lower line because of how the city values them. It prices a condo or co-op building as if it were a rental building, and those values usually sit well below what the units sell for. A co-op unit is assigned a share of its building's value according to its shares.
The department's rules say that once a value crosses the threshold, “the entirety of the property's value is subject to the surcharge.” So a condo valued at $999,999 owes nothing and one valued at $1,000,000 owes $40,000 a year. At $3 million the rate on the whole value rises from 4% to 5.25%, which adds $37,500 a year, and at $5 million the step is $62,500. A house valued at $5 million owes $40,000. The earlier bills the comptroller used for his estimate charged a fixed amount plus a rate on the part of the value above each line, the way income-tax brackets work, so they had no such jumps.
Read the chart data as a table
| Department of Finance value | Surcharge a year |
|---|---|
| $999,999 | $0 |
| $1,000,000 | $40,000 |
| $2,000,000 | $80,000 |
| $2,999,999 | $120,000 |
A familiar design
Economists call a tax like this a notch, and New York already has several. The 1% mansion tax and the supplemental rates added in 2019 apply to the whole purchase price once it reaches $1 million, $2 million, $3 million and higher lines. My research on those lines found that when one more dollar costs thousands in tax, buyers and sellers settle just below the line. Before 2019, sales at exactly $2 million were 7.8 times as common as prices around them. Afterward the ratio was 2.3, and sales at $1,999,999 went from four between January 2016 and March 2019 to 127 between 2020 and 2025. That story is here.
With the surcharge, though, the owner does not pick the number. Nobody can write $999,999 on a contract to stay out. What an owner can do is ask the city's Tax Commission to lower the value, and the reward is largest just above a line: a unit valued at $1.05 million that gets its value cut below $1 million saves $42,000 a year.
How many units sit near the line
The city's own data show how many apartments are in that position. In the final 2026-27 assessment roll, 9,403 of the city's 212,226 residential condo units are valued at $1 million or more, and 9,079 of those are in Manhattan. About one in five, 1,934 units, are valued between $1 million and $1.1 million, where a cut of 10% or less would take them under the line. The roll does not say which units are second homes, so these are the units that could owe, not the ones that will. Co-op units are left out because the city values them through their buildings.
Those values were mostly set in January, months before the budget fixed the $1 million line, and the count falls off smoothly across it: 1,158 units sit in the $50,000 just below $1 million and 1,036 in the $50,000 just above. If owners succeed in pushing their values down, later rolls should show a gap just above $1 million and a pile just below it. I expect that to happen. How large it gets depends on the Tax Commission. The Department of Finance declined proposals to let owners use sale prices to rebut or cap first-phase values, saying they conflict with the method the law sets, and the appraisal firm Miller Samuel noted in August that the law does not say what evidence an owner has to bring.
Read the chart data as a table
| City value | Condo units |
|---|---|
| $700,000 to $724,999 | 1,370 |
| $725,000 to $749,999 | 1,222 |
| $750,000 to $774,999 | 1,047 |
| $775,000 to $799,999 | 1,032 |
| $800,000 to $824,999 | 1,033 |
| $825,000 to $849,999 | 871 |
| $850,000 to $874,999 | 870 |
| $875,000 to $899,999 | 721 |
| $900,000 to $924,999 | 650 |
| $925,000 to $949,999 | 676 |
| $950,000 to $974,999 | 616 |
| $975,000 to $999,999 | 542 |
| $1,000,000 to $1,024,999 | 494 |
| $1,025,000 to $1,049,999 | 542 |
| $1,050,000 to $1,074,999 | 442 |
| $1,075,000 to $1,099,999 | 456 |
| $1,100,000 to $1,124,999 | 401 |
| $1,125,000 to $1,149,999 | 329 |
| $1,150,000 to $1,174,999 | 310 |
| $1,175,000 to $1,199,999 | 322 |
| $1,200,000 to $1,224,999 | 353 |
| $1,225,000 to $1,249,999 | 338 |
| $1,250,000 to $1,274,999 | 289 |
| $1,275,000 to $1,299,999 | 240 |
Houses face the same kind of line at $5 million, but the city values them from comparable sales, so their values sit close to what they sell for: houses that sold for between $4.5 million and $5.5 million carry a median city value of $4.99 million. The roll has 6,075 one- to three-family houses valued at $5 million or more, 3,050 of them in Brooklyn and 2,893 in Manhattan, and 1,178 sit in the first $500,000 above the line. Here too the line splits similar homes. Houses valued just under $5 million sold for a median $4.4 million, and those just over it for a median $4.8 million.
What a $1 million value means in sale prices
The city says a condo it values at $1 million is comparable to a house valued at $5 million. Sale records bear that out on average. I matched condo sales from 2023 to 2025 to the city's current value for the same apartment, leaving out foreclosure-type deeds and sales between people who share a surname, which left 11,794 sales. Condos that sold for between $4.5 million and $5.5 million carry a median city value of about $940,000, just under the line. A typical $5 million condo owes nothing.
The line also splits apartments that sell for the same money. Condos valued between $900,000 and $1 million sold for a median $4.5 million, and those valued between $1 million and $1.1 million for a median $4.8 million. As second homes, the first group owes nothing and the second owes $40,000 a year or more. The city's value is a loose guide to price because it comes from the building's estimated rental income, not the apartment's own sale: for half of these sales the price was between 3.5 and 5.3 times the value.
Read the chart data as a table
| City value, 2026-27 | Sales | Median price | Middle half of prices |
|---|---|---|---|
| $800,000 to $849,999 | 306 | $3,845,046 | $2,995,000 to $4,850,000 |
| $850,000 to $899,999 | 272 | $3,997,500 | $3,150,000 to $5,356,575 |
| $900,000 to $949,999 | 206 | $4,925,000 | $3,800,000 to $6,113,178 |
| $950,000 to $999,999 | 198 | $4,200,000 | $3,512,500 to $5,253,750 |
| $1,000,000 to $1,049,999 | 156 | $4,485,000 | $3,563,500 to $5,500,000 |
| $1,050,000 to $1,099,999 | 155 | $5,125,000 | $4,250,000 to $6,225,000 |
| $1,100,000 to $1,149,999 | 137 | $5,125,000 | $4,000,000 to $6,700,000 |
| $1,150,000 to $1,199,999 | 115 | $5,500,000 | $4,262,500 to $7,110,000 |
The deeds also show who buys these apartments. Of the matched sales of condos valued at $1 million or more, 43% went to a company such as an LLC and another 15% to a trust or estate, against about a quarter for condos valued between $300,000 and $600,000. For most units over the line, the owner on the deed is not a person, so whether the surcharge applies turns on the rules for who stands behind an LLC or a trust. The comptroller flagged that as one of the open questions in April.
When sale prices become the tax base
For the records I study, the second phase matters more. From July 2028 every covered home faces a single $5 million line, and the law requires the Department of Finance to value condos and co-ops with a sales-based method. Recorded sale prices will then feed the tax base.
The comptroller listed the share of condos and co-ops truly worth less than $5 million among the biggest unknowns behind his estimate. For condos, the matched sales give a first answer. Of the units the city now values at $1 million or more that sold between 2023 and 2025, a quarter (432 of 1,707) went for less than $5 million, and in Brooklyn most did. Meanwhile 439 condos valued under $1 million sold for $5 million or more, almost all in Manhattan. If the new values follow sale prices, the switch would move about as many condos into the tax as out of it, and Brooklyn would lose more than it gains. The comparison covers only units that sold, and the 2028 model will not copy prices one for one, so treat these numbers as a rough guide to 2028.
Read the chart data as a table
| Borough | Stay in | Drop out | Come in | Now | 2028 |
|---|---|---|---|---|---|
| Manhattan | 1,233 | 365 | 416 | 1,598 | 1,649 |
| Brooklyn | 42 | 67 | 23 | 109 | 65 |
Some of those prices are not what a buyer paid a stranger, and at the top of the market the biggest problem is bulk deals. Of the 3,758 condo sales of $4 million or more in the city's sales file for 2023 to 2025, 983 repeat the same price on the same block and the same day: 135 deals, the largest covering 61 apartments, with nearly every row carrying a price that matches no deed for a single unit. A model that read those rows as apartment prices would value a quarter of the high-end records at the price of a whole deal. Transfers between relatives and foreclosure-type deeds are rare at that price, a handful each among the matched sales, but they matter further down the market. In my work on foreclosure deeds I found 16,655 deeds among 1.47 million deed records in four boroughs whose recorded amount follows a legal rule, such as a lender's bid at auction. In a random sample of repeat house sales where buyer and seller share a surname, 16 of the 40 transfer forms showed a sale between relatives or another sign that it was not a market sale; those forms were read with AI assistance and I checked each reading. These deeds sit in the same sales file a valuation model would draw on, and the model will have to screen them out just as a price index does. The surcharge is set to expire in June 2031, so the second phase would run for three years.
Sources and methods
Ruling, plaintiffs, notices, exemptions (as reported by Gothamist) and revenue figures: Fortune, 4 November 2026. The court's wording and the 15 November mailing deadline: Patch, 4 November 2026. Rates, tax years, bill due date and the 13 October exemption deadline: Department of Finance. Whole-value rule, valuation method and the response to proposals on sale prices: Department of Finance final rules, July 2026. Appeal deadlines: NYC Tax Commission. Revenue estimate and the earlier rate schedules: NYC Comptroller, Fiscal Note 2-2026, April 2026. Evidence in valuation appeals: Miller Samuel, August 2026. Phases and expiry: Dechert and Day Pitney.
Condo counts: NYC Open Data, Property Valuation and Assessment Data, tax year 2026-27 final roll, final market value, building classes R1 to R4 in tax class 2, queried 7 November 2026 (script, counts). Sale prices against city values: linked dataset of NYC sales, deeds and mortgages, release 1.2.0, condo sales of $100,000 or more in 2023 to 2025 with a unique deed match, an ordinary deed under the foreclosure-deed classifier and no shared surname, latest sale per unit, joined to the same 2026-27 roll by unit lot (script, bins, summary). Results barely change when multi-parcel deeds are dropped or only 2025 sales are used. Buyer types come from the dataset's company and trust-or-estate flags on the deed's grantee. Houses near $5 million and the repeated-price condo rows: same dataset and roll (tax class 1, building classes A, B and C0) (script, results). A repeated-price row shares borough, block, date and price with at least one other row in the DOF sales file. Unit counts by value and the 2028 comparison by borough: chart script. Sold units may differ from units that did not sell, and co-ops are not covered. The surcharge bills use the values on the city's 24 July 2026 supplemental roll, which can differ for individual units. The chart applies the first condo and co-op rate to the whole value; it is an illustration, not a bill, and ignores exemptions (chart script).
Round-price figures: The Shape of the Tax, v3.7, Table 1. Legal-rule deeds: When a Deed Is Not a Market Sale, v1.0.14. Same-surname sample: Who Gets the House?, v3.12. The prediction about appeals is mine and is not tested in any of the papers.
New article text and original graphics: CC BY 4.0. Credit Pablo Loschi, NYC Housing Data; retain the source and sample, and identify edits. Underlying research releases retain their own terms.