October 12, 2026 update: rollout and exemptions

On September 29, a state judge ordered New York City to revise the surcharge rollout and send new notices. The city appealed and invoked a stay of that order; it said implementation would continue during the appeal. The ruling did not repeal the tax. See Reuters’ September 30 report.

The Department of Finance has extended the exemption-application deadline to October 13, 2026. Its published guidance identifies January 1, 2027 as the first payment date. A notice or listing on the supplemental roll does not, by itself, establish liability. Owners should review the current guidance and their notice with their tax adviser.

The market commentary below was originally published in August 2026 and uses second-quarter sales and July contract data. It should not be read as evidence of the tax’s effect on today’s prices.

BRN returns half of the commission we receive to our buyers, up to 1.5% of the purchase price—a one-time purchase benefit to consider separately from recurring taxes and other ownership costs.

The quarter before the line was drawn

Manhattan closed the second quarter at a record. The median sale price reached $1.25 million, up roughly 4.2 percent year over year, according to Douglas Elliman and Miller Samuel. Closed sales fell. Inventory ran about 15 percent below the prior year, and luxury listings dropped to 796 — the thinnest count in twenty-two years of tracking.

Read carefully, that is not a demand story. The median rose because the transaction mix shifted upward against very little supply. Fewer people bought, and the ones who did bought higher.

Then, on the first of July, the terms changed for a specific subset of them.

What the statute does

Article 30-C of the New York Tax Law imposes a surcharge beginning 1 July 2026. In its first phase, running through June 2028, it applies an annual surcharge of between 4 and 6.5 percent to condominiums and cooperative apartments with a Department of Finance market value of $1 million or more that do not qualify as a primary residence. One-to-three-family houses are captured at a Department of Finance market value of $5 million and above. From July 2028 through June 2031, the threshold is $5 million under the second-phase valuation rules.

The distinction between Department of Finance market value and sale price is doing real work here. For co-ops and condos, that valuation can be well below the sale price; the surcharge should be calculated from the applicable valuation, not a blanket percentage of the purchase price. The Comptroller’s office has estimated the measure will raise roughly $500 million annually for the city.

Primary residences are exempt, including qualifying use by a tenant or immediate family member. That matters more than the rate.

For the first time in recent memory, New York has attached a recurring cost to a buyer’s intent rather than to the price of the asset. Two identical apartments on the same line of the same building now carry different economics depending on who sleeps in them.

Four weeks of evidence

The early data is thin and should be treated that way. But the shape is legible.

In the first full week after the tax took effect, Olshan Realty counted 29 contracts signed at $4 million and above, totalling $182 million — up from 15 in the holiday week before. Broad luxury demand did not collapse.

The trophy tier is where the hesitation shows. Between 6 and 12 July, exactly one Manhattan property above $10 million went into contract, against a customary three to five. It was the weakest week for that segment since late December. Of the 29 contracts signed that week, twenty were for apartments asking under $6 million.

By the third week of July, 18 contracts at $4 million and above matched the ten-year average for the period, and two deals cleared $20 million.

A pause at the very top, absorbed within a month, with activity concentrating in the band below it. Jonathan Miller has cautioned against reading much into any single week, and he is right to. But the direction is consistent with what the statute was built to do.

Brooklyn and the primary-residence exemption

Across the river, the same rules apply: eligibility depends on the property’s valuation and qualifying primary-residence use.

Brooklyn posted its own records in the second quarter. Median and average price both rose 11 percent year over year to all-time highs, according to Corcoran. Average price per square foot reached $1,185. Resale condominium median price climbed 15 percent to $1.15 million.

Supply grew — active listings rose 8 percent to 2,003, the highest second-quarter figure since 2022 — but not where it counts. Inventory above $2 million fell 17 percent. Inventory above $1 million declined 5 percent, in a segment responsible for more than forty percent of the borough’s sales.

Property moved quickly. Days on market fell to 72, the fastest second quarter in a decade. In the $750,000 to $1 million band, average marketing time dropped 27 percent, to 49 days.

Owner-occupiers are buying into rising prices and thinning supply at exactly the level where they transact.

What this asks of a buyer

Two things follow, and neither is about the rate.

The first is that documentation now carries weight it did not carry in June. Primary-residence status is the exemption, and exemptions are administered through paperwork. Industry groups have already warned the tax will be difficult to apply cleanly, and the applicable brackets and exemption requirements are set out in Department of Finance guidance. Any buyer whose situation is not perfectly simple — trusts, corporate entities, families splitting time between two states — should have an answer from tax counsel before signing rather than after.

The second is that a purchase subject to the surcharge needs a complete carrying-cost analysis before an offer is set. The annual charge may affect what a particular buyer is willing to pay; it does not establish that a seller will accept a lower price.

We help you evaluate how ownership costs affect a purchase, working alongside your attorney and tax adviser. We never represent both sides of the same transaction. We also return half of the commission we receive to our buyers, up to 1.5% of the purchase price.

Contact Us to discuss a property you are considering.

Sources: Douglas Elliman and Miller Samuel, Manhattan sales report 2Q 2026; Corcoran, Brooklyn sales report 2Q 2026; Olshan Realty weekly luxury market reports, July 2026; New York State Tax Law Article 30-C; Office of the New York City Comptroller; New York City Department of Finance, non-primary residence property surcharge guidance. Signed-contract counts are a leading measure and are not directly comparable to closed-sale figures. Nothing here is tax or legal advice.