Episode 178: IN FOCUS: NYC Pied-à-Terre Surcharge with K. Eli Akhavan (Grant, Herrmann)

Thank you, Jonathan, for that introduction.

And of course, thank you for providing a platform for advisors, attorneys, CPAs, financial advisors to present their ideas, collaborate and share as a public service on the current topics of the day.

Good morning, everybody.

Thank you for joining us today.

The New York City Pied-de-Terre tax or More technically, the New York City peer-to-terror surcharge is certainly a topic that has been taking up many attorneys' time here in New York City ever since it was introduced and enacted over the summer.

And there has been a chaotic rollout, indeed, of this surcharge and of this tax.

I'm sure you see about it in the press.

Basic law itself, the potential exemptions, and what can be done to structure for the future.

So, just by way of background, May 28th, this was, the law was enacted, I'm sorry, the law was enacted as part HH of the fiscal year 2027 state budget.

July 14th, the Department of Finance final rules were published and they were effective immediately.

um if initially there was a filing deadline for exemptions um uh for for september i'm sorry for for um august then it went to september and now it's in october uh this was a recognition uh by uh i think the the mahmdani administration that the rollout was certainly not as smooth as intended to be there are a lot of hiccups a lot of people were caught up in the net um so for now the exemption application deadline is october 6. um then january 5th 2027 is the new status date for the next year.

So right now, and we'll get into this a bit more, the homes or the residences that received notices, their status was measured as of January 5th, 2026.

So even though the law was enacted in July, the status was retroactive or measured based on a January 5th, 2026 date.

And for the next fiscal year, The status of the residence is going to be measured as of January 5th, 2027.

One thing that is important to note, this is a, it's not in the form of a transfer tax, real estate transfer tax, real property transfer tax.

It's an annual surcharge.

It goes on top of the regular property tax.

There's no abatement credits or any type of exemption amount that you can apply against it.

If the residence is considered a non-primary residence, then that's it.

The tax applies.

The surcharge applies.

Okay, so let's just go through what we're going to go through today.

We're going to discuss the tax itself, who it covers, thresholds, and rates.

Then we're going to go, I would say, probably the most important part, the primary residence exclusion, the three statutory tests, the January 5th status date, which we briefly covered, and proof that this residence is indeed a primary resident.

Then we're going to discuss a little bit of entity structures because, for example, those of us who practice in the international field, we structure real estate acquisitions by non-residents and foreigners into the New York City real estate market through different types of entities.