By 5 Towns Central Staff

NEW YORK, N.Y. (June 30, 2026) — New York City has released proposed rules outlining how its new tax on high-value secondary residences will be enforced, with thousands of property owners expected to begin receiving eligibility notices later this summer.

Under the proposal, the Department of Finance will notify owners by August 30 if their properties have been identified as subject to the surcharge. The agency will also have the authority to review records dating back six years and conduct audits to determine whether a property qualifies for the tax or an exemption.

The surcharge applies to one-, two-, and three-family homes valued at $5 million or more, as well as condominiums and cooperative apartments valued at $1 million or more, when those properties are not used as a primary residence.

City officials said the regulations are intended to discourage attempts to avoid the tax. Owners who knowingly provide false or misleading information could face penalties equal to 50 percent of the tax owed. The proposed rules specifically address situations in which luxury properties are divided into multiple units solely to evade the surcharge, allowing the city to disregard such arrangements if they are determined to have been made in bad faith.

Property owners who receive a determination will generally have 30 days to challenge it through the New York City Tax Commission or, in certain cases, directly with the Department of Finance.

The surcharge is expected to generate between $340 million and $500 million annually from roughly 10,000 luxury second homes across the city. Tax rates vary depending on the type and value of the property, with higher rates applying to high-value condominiums and cooperative apartments.

The proposed regulations are open for public comment through July 9 before they can take effect.

The new tax has drawn criticism from segments of the real estate industry, with some organizations arguing that its valuation methods and enforcement provisions could face legal challenges. City officials, however, maintain that the measure is intended to ensure owners of high-value secondary residences contribute a greater share toward municipal services and infrastructure.