A London-based family with a Manhattan condominium held through a limited liability company may soon receive a New York City bill that is not merely a property-tax issue. Beginning July 1, 2026, New York Tax Law Article 30-C imposes a surcharge on covered New York City residences that do not serve as a primary residence. During the first phase, certain condominiums and co-ops are pulled into the regime based on the Department of Finance assessed value, not the property’s fair market value, purchase price, broker estimate, or private appraisal. In other words, property owners should not confuse FMV with the City’s assessed value for purposes of the first-phase condominium and cooperative thresholds. Meanwhile, class-one homes enter the regime at a $5 million market value.¹

The statute runs in two stages. For fiscal years beginning July 1, 2026, and before July 1, 2028, class-one homes are taxed at 0.8%, 1.05%, or 1.3%, while condominium and cooperative units are taxed at 4.0%, 5.25%, or 6.5%, depending on the applicable Department of Finance assessed-value bands. Beginning July 1, 2028, the broader $5 million threshold and 0.8% to 1.3% rate schedule applies across covered property.² The article is scheduled for repeal June 30, 2031, but sunset provisions are not planning strategies.

What changes first is administrative. New York City’s Department of Finance must make annual initial determinations of non-primary-residence status, and for the fiscal year beginning July 1, 2026, must issue notices no later than August 30, 2026.³ The Department’s proposed rulemaking is already moving, with comments due and a public hearing scheduled for July 9, 2026.⁴ Proof may include New York resident income-tax return address information, qualifying exemptions or credits, lease evidence, or use by immediate family. The statute also authorizes a six-year audit window for primary-residence submissions.⁵

Tax implications for cross-border owners

The central planning mistake is to treat the surcharge as avoidable simply by declaring the New York apartment a primary residence. For a non-U.S. individual, more days in New York may reduce a property surcharge but create income-tax residency exposure. New York treats an individual as a resident if the person is domiciled in New York or maintains a permanent place of abode in New York for substantially all of the year and spends 184 days or more in the state; the same framework applies by substituting New York City for New York State.⁶

Federal residency is a separate trap. A nonresident alien (“NRA”) can become a U.S. resident for income-tax purposes under IRC §7701(b) by satisfying the substantial-presence test: at least 31 days in the current year and 183 weighted days over the current and prior two years.⁷ Visa category, treaty residence, closer-connection analysis, and Form 8843 for certain exempt individuals should be reviewed before a family member is installed in the apartment to support “primary residence” evidence.

For U.S. citizens, green-card holders, and other U.S. tax residents living abroad, the surcharge adds another layer to an already global filing profile. If foreign accounts fund the apartment, the Foreign Bank Account Report (“FBAR”) may be required on FinCEN Form 114 once aggregate foreign financial accounts exceed $10,000 at any time during the year.⁸ The Foreign Account Tax Compliance Act (“FATCA”) Form 8938 may also apply to specified foreign financial assets, with thresholds beginning at $50,000 for certain U.S.-resident unmarried taxpayers and higher thresholds for joint filers and taxpayers living abroad.⁹

Foreign sellers also should not confuse the pied-à-terre surcharge with capital-gain collection. A later sale by an NRA or foreign entity remains subject to the Foreign Investment in Real Property Tax Act (“FIRPTA”) rules under IRC §§897 and 1445, including buyer withholding on dispositions of U.S. real property interests.¹⁰ For estate planning, direct U.S. real estate ownership by a nonresident noncitizen can trigger Form 706-NA filing if U.S.-situated assets exceed $60,000 at death.¹¹

Deductibility is not guaranteed to soften the blow. IRC §164 allows deductions for state and local real property taxes, but individual taxpayers must still contend with Schedule A limitations on state and local tax deductions; the practical federal benefit may be limited or unavailable.¹² Rental use, related-party leases, trust ownership, and tiered entities should be modeled before changing title or occupancy.

Operationally, co-op boards face collection risk because the statute directs the Department of Finance to add cooperative-unit surcharges to the cooperative property’s statement of account, with collection from the tenant-stockholder.¹³ For internationally mobile owners, that means closing escrows, managing-agent records, tax-return addresses, lease files, and travel calendars are now part of the same evidence package.

The better posture is not panic; it is documentation. Cross-border owners should decide whether the New York apartment is a personal-use residence, a rental asset, an estate-planning asset, or a future disposition candidate, then align New York, federal, and treaty positions before the first notice arrives. Contact Global Taxes LLC to review your ownership structure, day count, filing profile, and surcharge exposure before the August 30, 2026 notice cycle creates a harder record to unwind. This article is informational only and does not constitute professional advice.

Works Cited

1. New York State Senate. “Tax Law § 1350: Imposition of Surcharge.” NYSenate.gov, 2026, https://www.nysenate.gov/legislation/laws/TAX/1350.

2. New York State Senate. “Tax Law § 1353: Surcharge Rates.” NYSenate.gov, 2026, https://www.nysenate.gov/legislation/laws/TAX/1353.

3. New York State Senate. “Tax Law § 1352: Primary Residence.” NYSenate.gov, 2026, https://www.nysenate.gov/legislation/laws/TAX/1352.

4. New York City Department of Finance. “Rule Relating to Surcharge on Certain Non-Primary Residences.” NYC Rules, 2026, https://rules.cityofnewyork.us/rule/rule-relating-to-surcharge-on-certain-non-primary-residences/.

5. New York State Senate. “Tax Law § 1352: Primary Residence.” NYSenate.gov, 2026, https://www.nysenate.gov/legislation/laws/TAX/1352.

6. New York State Department of Taxation and Finance. “Income Tax Definitions.” Tax.NY.gov, https://www.tax.ny.gov/pit/file/pit_definitions.htm.

7. IRS. “Substantial Presence Test.” IRS.gov, 14 Mar. 2026, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test.

8. IRS. “Report of Foreign Bank and Financial Accounts (FBAR).” IRS.gov, 9 Apr. 2026, https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar.

9. IRS. “Summary of FATCA Reporting for U.S. Taxpayers.” IRS.gov, https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers.

10. IRS. “FIRPTA Withholding.” IRS.gov, https://www.irs.gov/individuals/international-taxpayers/firpta-withholding.

11. IRS. “Estate Tax for Nonresidents Not Citizens of the United States.” IRS.gov, https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax-for-nonresidents-not-citizens-of-the-united-states.

12. IRS. “Instructions for Schedule A (Form 1040).” IRS.gov, 2025, https://www.irs.gov/instructions/i1040sca.

13. New York State Senate. “Tax Law § 1354: Administration of Surcharge.” NYSenate.gov, 2026, https://www.nysenate.gov/legislation/laws/TAX/1354.

Please note: This content is intended for informational purposes only and is not a replacement for professional accounting or tax preparatory services. Consult your own accounting, tax, and legal professionals for advice related to your individual situation. Any copy or reproduction of our presentation is expressly prohibited. Any names or situations have been made up for illustrative purposes — any similarities found in real life are purely coincidental.

Alicea Castellanos is the CEO and Founder of Global Taxes LLC. Alicea provides personalized U.S. tax advisory and compliance services to high-net-worth families and their advisors. Alicea has more than 20 years of experience. Prior to forming Global Taxes, Alicea founded and oversaw operations at a boutique tax firm, worked at a prestigious global law firm and CPA firm. Alicea specializes in U.S. tax planning and compliance for non-U.S. families with global wealth and asset protection structures which include non-U.S. trusts, estates, and foundations that have a U.S. connection.

Alicea also specializes in foreign investment in U.S. real estate property and other U.S. assets, pre-immigration tax planning, U.S. expatriation matters, U.S. persons in receipt of foreign gifts and inheritances, foreign accounts and assets compliance, offshore voluntary disclosures/tax amnesties, and foreign companies wanting to do business in the U.S. Alicea is fluent in Spanish and has a working knowledge of Portuguese.

Alicea is an active member of the Society of Trusts & Estates Practitioners (STEP), the New York State Society of Certified Public Accountants (NYSSCPA), the American Institute of Certified Public Accountants (AICPA), the International Fiscal Association (IFA), a member of Clarkson Hyde Global, a world-wide association of accountants, auditors, tax specialists and business advisors and the Global Referral Network (GRN).

Distinctly, in 2020, Alicea was awarded with a prestigious NYSSCPA Forty Under 40 Award. She was selected as someone that has notable skills and is visibly making a difference in the accounting profession. Alicea has also been recognized as a leading expert for tax advice and she has been invited to join Advisory Excellence, as their exclusively recommended tax expert in the USA.

In 2021 and 2022, Alicea won Gold and Silver in Citywealth's Powerwomen Awards for USA - Woman of the Year - Business Growth (Boutique). In 2023, she received Gold for Company of the Year - Female Leadership (Boutique) and was listed in the Global Elite Directory, an exclusive directory of top wealth advisors.

In 2024, Alicea was named to Citywealth's Top 50 Tax Professionals, shortlisted for the Magic Circle Awards, peer-nominated as a Non-Legal Adviser, and appointed as a judge for the Citywealth Powerwomen Awards USA. She is also certified as an International Business Advisory Firm by AuditTrust International and a proud STEP member for 2024/2025.