What Is Changing Under the Proposed ASU?
Under the current ASC 820 framework, a contractual restriction on the sale of an equity security generally is not considered part of the security’s unit of account. As a result, the restriction does not reduce the fair value measurement of the equity security.
This approach was clarified by ASU 2022-03, which established that contractual sale restrictions are attributable to the holder rather than the equity security itself.
The FASB is now proposing a different approach specifically for investment companies. Under the proposed ASU, an investment company would be required to:
· Consider contractual sale restrictions when measuring the fair value of affected equity securities.
·
Recognize the impact of the restriction when determining fair value.
·
Disclose the amount of the discount attributable to contractual sale restrictions.
The proposal is intended to better align reported fair value with how market participants may value an investment that cannot be freely sold.
What Is the NYC Pied-à-Terre Tax?The pied-à-terre tax is an annual surcharge on qualifying non-primary residences in New York City. Unlike a transfer tax paid when purchasing a property, it is recurring and administered through the City's property-tax system.
For the 2026–27 and 2027–28 property tax years, the surcharge may apply to:
• One-, two- and three-family homes valued by the Department of Finance at $5 million or more
• Condominium and cooperative units valued at $1 million or more
The surcharge can also apply where qualifying property is held through structures such as
LLCs, partnerships, corporations or trusts.
What Are the 2026–2028 Tax Rates?
Condominiums and Co-ops
|
Department of Finance Market Value
|
Annual Surcharge
|
|
$1M – <$3M
|
4%
|
|
$3M – <$5M
|
5.25%
|
|
$5M+
|
6.5%
|
One-, Two- and Three-Family Homes
|
Department of Finance Market Value
|
Annual Surcharge
|
|
$5M – <$15M
|
0.8%
|
|
$15M – <$25M
|
1.05%
|
|
$25M+
|
1.3%
|
The applicable valuation is based on the City's assessment framework and may differ significantly from the property's purchase price or perceived market value.
Who May Qualify for an Exemption?
The surcharge generally does not apply where a qualifying property is used as a primary residence by the owner, qualifying immediate family member, tenant, or certain individuals holding a majority interest in an entity that owns the property.
Entity-owned properties can require additional analysis and documentation. Owners who received a Department of Finance notice and believe they qualify for an exemption must submit the required documentation by September 18, 2026.
Why It Matters for Family Offices & Investors?
For sophisticated investors, the pied-à-terre tax should not be viewed as an isolated property expense.
A New York residential property may form part of a broader structure involving:
- Family offices and trusts
- Investment partnerships and LLCs
- International ownership
- Multi-jurisdictional tax reporting
The new surcharge becomes another important consideration within a broader tax, estate, wealth, and financial planning framework. For many family offices and high-net-worth individuals, evaluating ownership structures, succession planning objectives, and long-term tax implications may be just as important as understanding the surcharge itself.
For family offices and alternative investment professionals, understanding how property ownership interacts with entity structures, tax obligations and long-term wealth strategies can help identify potential exposure and avoid unexpected costs.
Does the NYC pied-terre tax apply to properties owned through LLC?
Potentially. The surcharge may apply whether qualifying property is owned directly or through an entity. Ownership structure and occupancy should be carefully evaluated.
How do I determine whether a property qualifies for an exemption?
Eligibility depends on how the property is used and who occupies it. Owners who believe they qualify should review the applicable requirements and support documentation.
Does the tax apply to second homes?
The surcharge generally applies to qualifying non-primary residences that meet the applicable valuation thresholds.
Can trust and other entities be affected?
Yes. The surcharge may apply to qualifying properties owned through trusts, corporations, partnerships, LLCs, and similar ownership structures.
Key Dates:
- July 1, 2026: Surcharge takes effect
- September 18, 2026: Extended exemption application deadline
- January 1, 2027: First payment due for the 2026–27 tax year
- July 1, 2028: Second phase of the surcharge framework begins
- June 30, 2031: Current scheduled expiration of the surcharge
What Should Owners Do?
Owners and investment structures with potentially affected properties should:
- Review the property's Department of Finance valuation
- Confirm whether the property qualifies as a primary residence.
- Review the legal ownership and entity structure.
- Assess the surcharge within the broader tax position.
- Monitor changes to the rules and valuation methodology.
