How New York City’s New Pied-à-Terre Tax May Affect Your Estate Plan

As of July 1, 2026, New York City's pied-à-terre tax is in effect across the five boroughs. Although the tax was halted on August 10, it was reinstated on August 13. Enacted under New York Tax Law §§ 1350–1356, the tax applies to certain high-value residential properties that are not used as a primary residence. Properties owned through trusts and other entities may also be subject to the tax, making this an important moment to review both your ownership structure and your estate plan. The Department of Finance has already begun notifying affected owners. Following criticism from elected officials and tax attorneys that the initial notification list caused widespread confusion among residents who clearly did not belong on it, the exemption application was extended to September 18, 2026. A property is generally exempt if it serves as the primary residence of the owner, an immediate family member, or a tenant under a lease of at least one year. An owner may claim only one primary residence for purposes of the tax. The tax structure rolls out in two phases under the guidelines of Rules of the City of New York (RCNY) Title 19, Chapter 62. In phase 1, running from July 1, 2026 through June 30, 2028, the city uses its existing property tax assessment rules, which significantly understate the true market value of condos and co-ops. To make up for these artificially low property values, Phase 1 sets a lower starting entry point of $1 million in assessed value for condos and co-ops, though a $1 million official tax value often represents a real-world market price in excess of $4 million, and applies a higher tax rate of between 4% and 6.5%. Single-family homes in Phase 1 use their standard market value with a $5 million entry threshold and lower rates between 0.8% and 1.3%. In phase 2, running from July 1, 2028 through June 30, 2031, the city replaces this dual setup with a new system that calculates actual real-world market values for condos and co-ops using comparable property sales. Once this new valuation system is in place, all housing types will fall under the same standard: a $5 million market value entry point and matching tax rates ranging from 0.8% to 1.3%. As a result, any secondary residence with an actual market value below $5 million will be completely exempt from the surcharge starting in July 2028. For properties held in trust, the law presents further challenges. According to the administrative rules in 19 RCNY § 62-06, a trust-owned residence will remain subject to the tax unless the trust has a single qualifying beneficiary or family member of a beneficiary who occupies the property as a primary residence. Because many estate plans involve multiple current or remainder beneficiaries, the structure of ownership alone may determine whether the tax applies. Discretionary trusts and multi-generational trusts with contingent beneficiaries are especially vulnerable and may trigger the tax automatically under the baseline standards of Tax Law § 1351(m). The law…

Read more about the article YEAR-END CHARITABLE AND ESTATE PLANNING STRATEGIES AHEAD OF 2026 TAX CHANGES

YEAR-END CHARITABLE AND ESTATE PLANNING STRATEGIES AHEAD OF 2026 TAX CHANGES

As 2025 comes to an end, clients should take a close look at their charitable giving and estate planning strategies. Significant tax changes are scheduled to take effect on January 1, 2026, and these changes will affect the timing, deductibility, and structure of charitable gifts. Who Do These Changes Really Affect? Although the 2026 charitable deduction changes sound sweeping, they will not impact everyone equally. In practice, the people most affected by these changes are: Clients who itemize their deductions each year. Clients who make large charitable gifts well above the 0.5% AGI floor. Higher-income clients in the highest tax bracket. Clients who intend to “bunch” gifts or give through donor-advised funds. New Limitations for Itemizers Starting in 2026 More significant changes will apply to taxpayers who itemize their deductions. 0.5% AGI Floor: Starting in 2026, taxpayers will only be able to deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI). This means the first portion of your charitable giving will no longer be deductible. For example, if your AGI is $500,000, the first $2,500 of your charitable contributions will not count toward your deduction and only amounts above that level will be deductible. Reduced Value of Deductions for Top Earners: Taxpayers in the highest income tax bracket will also see the value of their deductions reduced. Beginning in 2026, each dollar of itemized deductions, including charitable contributions, will save 35 cents in taxes instead of 37 cents. Although the current AGI percentage limits for different types of charitable gifts will remain the same, these new rules will generally make charitable deductions less valuable for itemizers beginning in 2026. Charitable Planning Opportunities for 2025 Because next year’s charitable giving rules are less favorable, many donors may benefit from completing planned gifts in 2025. Key strategies include: Accelerate Planned Giving: Individuals considering substantial charitable contributions may secure a larger benefit by completing these gifts before year-end. Consider Donor-Advised Funds: Contributing to a donor-advised fund, or DAF, in 2025 allows taxpayers to claim a deduction under current law while retaining control over the DAF account and  flexibility to recommend grants to charities in future years. Use Qualified Charitable Distributions: For individuals age 70½ or older, Qualified Charitable Distributions, or QCDs, from IRAs remain an effective way to make charitable gifts without increasing AGI. QCDs are not affected by the 2026 changes and continue to provide strong planning advantages. New Charitable Deduction for Non-Itemizers in 2026 Beginning in 2026, taxpayers who use the standard deduction will be allowed to deduct a small amount of their charitable giving even if they do not itemize. The maximum deduction will be $1,000 for single filers and $2,000 for married couples filing jointly. This deduction applies only to cash gifts made directly to public charities. Donations to donor-advised funds or private foundations will not qualify, nor will gifts of property or other non-cash items. Although this new deduction provides a modest benefit for taxpayers who do not itemize, it is far less generous than…