Application of the new law for property owned by an LLC, trust or another entity

June 2026

 
 

The Pied – a Terre Tax distinction may be relatively straightforward when an individual owns and occupies a unit directly. It becomes much more complicated when the record owner is an LLC, a trust, or another entity.

For LLC-owned properties, the relevant questions include:

  • Who ultimately controls the entity,

  • Who uses the property,

  • Whether any beneficial owner treats the property as a primary residence,

  • Whether the property is rented to a full-time resident

  • How the city would verify these facts

The statute that looks simple at the property level may require a much more nuanced ownership and use analysis at the entity level.

The pied-à-terre tax should also be viewed against a broader transparency backdrop.

The New York and federal regulators have increasingly focused on entity-owned residential real estate, particularly where ownership structures may obscure the individuals who ultimately control or benefit from the property.

The tax was enacted as a property tax surcharge rather than a beneficial ownership statute, enforcement may depend on identifying who owns, occupies, or benefits from the property.

The new legislation has become a diligence item in purchase, sales, financings, and restructurings involving high-value New York City residential property.

LLC Ownership

The pied a terre tax targets New York City’s luxury second homes valued at $5 million or more that are not occupied and are not a primary residence. The legislation follows the framework of the prior Senate Bill S44B, then the tax would not apply if the property were the primary residence of at least one owner, rented to a primary resident, or occupied by the parent or child of at least one owner.

These exclusions may be straightforward when the record owner is an individual, but become much more complicated when the record owner is an LLC.

For example, for an individual owner, would ask: Does this individual own this $8 million condo? and Is this $8 million condo the individual’s primary residence?

For an LLC, the analysis is more complex.

  • Who owns or controls this LLC?

  • Who actually uses this condominium?

  • Is any beneficial owner treating it as a primary residence?

  • Would an exemption still apply if LLC-owned property is occupied by the parent or child of the LLC’s owner?

We shall confirm whether the property could be subject to the surcharge, whether the ownership structure creates disclosure or reporting obligations, and whether purchase agreements should include specific representations, covenants, prorations, or indemnities relating to pied-à-terre tax exposure.

The transaction documents may need to address whether the property has been used as a primary residence, whether it has been rented to a primary resident, whether the seller has received notices or assessments and whether any unpaid surcharge should be treated like a real property tax lien or closing adjustment.

Property owners must avoid assuming that entity ownership alone determines the result. Restructuring ownership, changing membership interests, renting the property, changing residency, or transferring title could each have a tax, transfer tax, financing, estate planning and disclosure consequence.

Ideally, property owners should have a coordinated review of the corporate, tax, real estate and trust and estates before making any decisions regarding property ownership that could subject the property to the pied a terre tax.

Key question remains regarding the pied a terre tax:

How will “primary residence” be tested for LLC-owned properties?;

Will the test look through the entity to beneficial owners?; Will occupancy by a parent or child qualify for an exemption where the record owner is an LLC?;

  • How will rentals affect applicability?;

  • Will trusts, partnerships and foreign entities be treated differently?;

  • Will the tax apply based on market value, assessed value, or a separate valuation method?

  • How much private, confidential information must be disclosed to qualify for the exemption?

  • How will exemptions, appeals, and annual certifications work?

The pied-à-terre tax is not just a tax issue. For LLC-owned luxury residences, it may become a corporate governance, disclosure, diligence, and transaction-planning issue.

It is suggested that owners and advisors need to identify potentially affected properties, review ownership and occupancy arrangements and consider whether existing transaction documents, operating agreements and reporting practices adequately address potential exposure. While the tax’s basic framework issued, the important details remain unresolved, including how LLC-owned residences, trusts, beneficial owners, family occupancy and exemptions will be handled. LLC owners need to remain vigilant and carefully monitor the additonal legislative developments surrounding the pied-à-terre tax, especially before making ownership, transfer, leasing and restructuring decisions that could have an impact on the property post-enactment.

LLC or trust holds the deed, the NYC pied-à-terre tax will apply if the beneficial owner uses the property as a second home and it meets the value thresholds. Careful structuring, documentation, and possibly a primary-residence arrangement can help avoid the surcharge.

 
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