New York City introduced an annual pied-a-terre surcharge on non primary residences this summer, and the first bills land on 1 January 2027. For a buyer holding a Manhattan condominium as an investment, that single change moved the comparison with Dubai further than anything in the last decade.
By Umer Shauket, Founder & CEO, Cresco Real Estate. Dubai head office, US office in Los Angeles. Licensed UAE brokerage, RERA ORN 34288.
New York is the hardest of the three American cities to compare with Dubai, because New York does not have one property tax system. It has four classes, a market value that bears almost no relationship to what you paid, and a set of transfer taxes that fire at different moments and land on different parties.
Then in July 2026 New York added something new that changes the answer for exactly the kind of buyer who reads this page.
If you are buying a Manhattan condo you do not intend to live in as your primary residence, your annual carrying cost went up sharply this summer, and the first bills arrive on 1 January 2027.
Here is the whole picture, with the instruments behind each number.
New York State charges a supplemental real estate transfer tax on residential purchases at or above one million dollars. Everyone calls it the mansion tax. Two features matter.
It is paid by the buyer, unlike almost every other transfer tax in the state. And the applicable rate applies to the entire consideration, not to the excess above the bracket.
| Purchase price | Mansion tax rate | Tax |
|---|---|---|
| $999,999 | 0% | $0 |
| $1,000,000 | 1% | $10,000 |
| $1,999,999 | 1% | $20,000 |
| $2,000,000 | 1.25% | $25,000 |
| $5,000,000 | 1.75% | $87,500 |
| $25,000,000 and above | 3.9% | $975,000 and up |
Look at the two million dollar line. Buying at $2,000,000 rather than $1,999,000 costs you an extra thousand dollars of price and an extra five thousand dollars of tax. The bracket steps are cliffs, not margins, and there are several of them between one million and twenty five million.
Dubai has no equivalent. The DLD transfer fee is a flat 4% of the purchase price at every level. Higher at the bottom of the market, dramatically lower at the top, and with no bracket to plan around.
| Charge | Who pays | Rate |
|---|---|---|
| NYS mansion tax | Buyer | 1% to 3.9%, on the whole price |
| NYS real estate transfer tax | Seller | 0.4%, rising to 0.65% at $3 million and above |
| NYC real property transfer tax, residential | Seller | 1.425% above $500,000 |
| NYC RPTT, buildings of four or more units | Seller | 2.625% |
| Mortgage recording tax | Borrower | Roughly 1.925% of the loan on residential over $500,000 |
| Dubai DLD transfer fee | Buyer by custom | 4% flat, all values |
Two things fall out of that table.
A New York buyer taking a mortgage pays a tax on the borrowing itself. The mortgage recording tax adds close to two percent of the loan amount before the first payment. Dubai charges a mortgage registration fee at the DLD of 0.25% of the loan plus a small admin fee. That is roughly an eighth of the New York cost.
And on a four unit or larger building the seller side in New York City alone is 2.625% plus the state 0.4% or 0.65%. Combined with the buyer's mansion tax, a single New York transaction can move five percent of value to government before either party has paid a broker.
New York City's FY2026 class tax rates are 19.843% for Class 1 and 12.439% for Class 2. Those numbers look terrifying and they are almost meaningless on their own, because they apply to a billable assessed value that is a fraction of a fraction of market price.
What matters is the class you land in.
| Property type | Class | FY2026 rate |
|---|---|---|
| One to three family home | Class 1 | 19.843% |
| Condominium or co-op | Class 2 | 12.439% |
| Rental building, four units or more | Class 2 | 12.439% |
Run through the assessment machinery, the effective property tax on a New York City condominium works out at roughly 0.71% of sale price. That figure comes from the NYU Furman Center's analysis of sales data and is an average across a very wide distribution, so treat it as a starting point and not as your bill. Pull the actual notice of property value from the Department of Finance for the specific unit before you underwrite.
Roughly 0.71% is genuinely low by American big city standards. It is lower than Los Angeles. It is far lower than Miami. It is one of the few places where the New York numbers flatter New York.
Dubai charges nothing. There is no annual ad valorem property tax on a freehold unit in Dubai. You pay a service charge to the owners association, set per square foot per year, approved by RERA and collected through the Mollak system, and that is a building cost rather than a tax.
This is the part that has not made it into most comparison content yet.
New York has introduced an annual pied-a-terre surcharge on New York City residential property that is not the owner's primary residence, under New York Tax Law Article 30-C, sections 1350 to 1356. It took effect 1 July 2026. First bills are due 1 January 2027.
For Class 2 property, which is where condominiums sit, the surcharge runs at 4%, 5.25% and 6.5% on tiers of the Department of Finance market value.
Note carefully what the surcharge is charged on. It is charged on the DOF market value, not on the billable assessed value that produces that comfortable 0.71% effective rate. For condominiums the DOF market value has historically run at a median of roughly twenty percent of actual sales value, because condos are valued as if they were rental buildings.
Work that through and the scale becomes clear.
| Annual cost, non primary residence condo | New York City | Dubai |
|---|---|---|
| Ordinary property tax | Roughly 0.71% of sale price | $0 |
| Pied-a-terre surcharge, Class 2 | 4% to 6.5% of DOF market value | $0 |
| Effect on the total bill | Roughly doubles it, or more | No equivalent exists |
| Common charges or service charge | Building specific | Building specific, RERA approved |
An investor holding a Manhattan condominium as a second home or an unoccupied asset is now looking at an annual surcharge that is in the same order of magnitude as the property tax bill itself, and on many units larger than it.
We are stating the structure, not your number. The tiers, the DOF market value on your specific unit and the primary residence test all need checking against the Department of Finance for your property. But the direction is not ambiguous, and the timing matters. If you are buying a non primary New York condo in the second half of 2026, the first surcharge bill lands before you have owned it a full year.
This is the sharpest structural difference between the two cities right now. New York has just introduced an annual charge aimed specifically at the non resident owner. Dubai's entire property proposition is built around welcoming exactly that buyer.
The New York City Rent Guidelines Board sets the allowable increases on rent stabilized leases. Under Order Number 58, covering leases commencing on or after 1 October 2026, the allowable increase is 0% on one year renewals and 0% on two year renewals.
Zero. Not a low number. Zero, on both terms.
If you are underwriting a rent stabilized New York building on the assumption of two to three percent annual renewal growth, that assumption failed this cycle. Free market units in New York are unaffected, but the stabilized share of the housing stock is large and the risk is that a political cycle repeats the order.
Dubai's rent increases run off the RERA rental index under Decree No. 43 of 2013, and the mechanism is a gap test rather than a fixed cap.
| Current rent versus RERA market rate | Maximum increase |
|---|---|
| Within 10% of market | 0% |
| 11% to 20% below | 5% |
| 21% to 30% below | 10% |
| 31% to 40% below | 15% |
| More than 40% below | 20% |
The philosophical difference is worth naming. New York caps the increase in absolute terms, so a below market stabilized unit stays below market permanently. Dubai caps the increase relative to market, so a landlord who has fallen behind is permitted to close the gap in steps and a landlord already at market gets nothing. Dubai is not a free market in rent. It simply has a path back to market that New York does not.
On possession, Dubai requires twelve months notarised notice to recover a unit for sale or personal use under Law No. 26 of 2007 as amended by Law No. 33 of 2008.
Now the part that decides this for a New Yorker, and that Dubai marketing pages will not put in front of you.
If you are a New York City resident, New York State and New York City both tax your Dubai rental income.
The combined top marginal rate on a New York City resident runs to roughly 14.78% once state and city are stacked. New York does not have a preferential rate for long term capital gains at the state level, so the gain on selling your Dubai apartment is taxed as ordinary income by New York.
And there is no relief from the UAE side. The UAE charges you nothing on that income, so there is no foreign tax paid, so there is no foreign tax credit to claim. The absence of UAE tax is exactly what removes the offset. There is no US to UAE income tax treaty either.
| Event on a Dubai property | UAE | US federal | NY state and city |
|---|---|---|---|
| Annual property tax | None | None | None |
| Rental income | None | Schedule E, ordinary rates | Up to roughly 14.78% |
| Capital gain on sale | None | Long term rates plus 3.8% NIIT | Taxed as ordinary income |
| Foreign tax credit | None available, because no UAE tax was paid | ||
| 1031 exchange | Blocked. IRC section 1031(h) does not permit US to foreign exchanges | ||
So the honest framing for a New Yorker is not zero versus 0.71%. It is this. Dubai removes the annual property tax, removes the pied-a-terre surcharge, removes the mansion tax and removes the mortgage recording tax. It does not remove your federal return and it does not remove New York from your rental income.
Dubai still wins that comparison on net carrying cost, and after the July 2026 surcharge it wins by more than it did a year ago. But it wins for the reason above, not because the income is untaxed. The income is taxed. Just not by the UAE.
We are not tax advisers and none of this is tax advice. Take this table to your CPA before you commit. If your CPA has not filed a Form 8938 or a FinCEN 114 before, get one who has.
American investors underwrite domestic residential rental property on 27.5 year depreciation. Foreign residential rental property does not qualify. It runs on the Alternative Depreciation System at 30 years, straight line.
Smaller annual deduction, same building. It will not flip your answer but it will move your after tax yield, and if you copied the schedule from your Brooklyn brownstone you have overstated the Dubai return.
Effective property tax on a condo is low. At roughly 0.71% of sale price, a New York condo carries less annual ad valorem tax than Los Angeles or Miami. If you are going to live in it as your primary residence, the surcharge does not reach you and this is a real advantage.
Depth. Thirty year fixed rate financing, dozens of competing lenders, title insurance, and a body of real property case law running back two centuries. Dubai caps mortgage tenor at 25 years under UAE Central Bank Circular No. 31 of 2013, caps the debt burden ratio at 50%, and limits total financing to seven times annual income for expatriates.
Liquidity at the top. New York's ultra prime market has a deeper global bid than Dubai's, though the gap has narrowed considerably since 2022.
No annual property tax and no surcharge. After 1 July 2026 this is the whole ballgame for a non primary residence buyer.
No buyer side transfer tax cliff. A flat 4% at every price point, against a mansion tax that jumps in brackets applied to the entire consideration.
No mortgage recording tax. Dubai's mortgage registration fee is 0.25% of the loan. New York's is close to 1.925%.
No UAE income tax and no UAE capital gains tax for an individual holding in a personal capacity. Cabinet Decision No. 49 of 2023 confirms individuals earning real estate income in a personal capacity fall outside UAE corporate tax.
Residency attached to the asset. New York gives you an apartment. Dubai property at the qualifying threshold can carry a renewable investor visa. Confirm the current terms directly with the Dubai Land Department, because the federal and emirate level descriptions of the property investor visa do not fully agree with each other.
Buy in New York if it will be your primary residence, or if you want the depth of the American financing and legal system more than you want yield. The pied-a-terre surcharge does not touch a primary residence and the condo effective rate is genuinely competitive.
Buy in Dubai if you are buying as an investor or a second home owner and you have just read the surcharge section and understood what it does to a New York holding cost. The gap between the two cities on annual carry for a non resident owner is now wider than at any point in the last decade.
What we will not tell you is that Dubai is tax free. It is tax free in Dubai. You are still a New Yorker, and New York does not stop at the Hudson.
Same method, same sourcing, different American city.
What is the New York pied-a-terre surcharge and when does it start?
It is an annual surcharge on New York City residential property that is not the owner's primary residence, imposed under New York Tax Law Article 30-C, sections 1350 to 1356. It took effect on 1 July 2026 and the first bills are due on 1 January 2027. For Class 2 property, which is where condominiums sit, the surcharge runs at 4%, 5.25% and 6.5% on tiers of the Department of Finance market value. Because the DOF market value for condominiums has historically run at a median of roughly 20% of sales value, the surcharge can equal or exceed the ordinary property tax bill on the same unit. Verify the tiers and your unit's DOF market value with the Department of Finance.
Who pays the New York mansion tax, the buyer or the seller?
The buyer. The New York State supplemental real estate transfer tax applies to residential purchases at or above one million dollars and it is a buyer obligation. The applicable rate applies to the entire consideration rather than to the excess above the bracket, so the brackets behave as cliffs. A purchase at 2,000,000 dollars pays 1.25% and a purchase at 1,999,999 dollars pays 1%, a difference of roughly 5,000 dollars for one dollar of price.
What is the effective property tax rate on a New York City condo?
The FY2026 Class 2 rate is 12.439%, but that applies to a billable assessed value that is a small fraction of market price. Run through the assessment machinery the effective rate on a New York City condominium works out at roughly 0.71% of sale price, based on the NYU Furman Center's analysis of sales data. That is an average across a very wide distribution, so pull the notice of property value for the specific unit from the Department of Finance before underwriting.
Does Dubai charge an annual property tax?
No. There is no annual ad valorem property tax on freehold ownership in Dubai. Owners pay a service charge to the owners association, set per square foot per year, approved by RERA and collected through the Mollak system. It is a building maintenance cost, not a tax, and it is not paid to a government.
Do I still pay New York tax on Dubai rental income?
If you are a New York City resident, yes. New York State and New York City both tax residents on worldwide income, with a combined top marginal rate of roughly 14.78%. New York does not apply a preferential rate to long term capital gains at the state level, so a gain on selling a Dubai property is taxed as ordinary income. There is no foreign tax credit available because the UAE levies no tax on that income, and there is no United States to UAE income tax treaty.
How much are New York transfer taxes in total?
On a residential sale in New York City the seller pays a 1.425% city real property transfer tax above 500,000 dollars and a state real estate transfer tax of 0.4%, rising to 0.65% at three million dollars and above. The buyer pays the mansion tax of 1% to 3.9% on the entire consideration. A buyer taking a mortgage also pays a mortgage recording tax of roughly 1.925% of the loan. On a four unit or larger building the city transfer tax rises to 2.625%.
What are Dubai rent increases capped at?
Rent increases in Dubai are governed by the RERA rental index under Decree No. 43 of 2013 and the cap is relative to market rather than absolute. If the current rent is within 10% of the RERA market rate no increase is allowed. Where rent sits 11% to 20% below market the cap is 5%, 21% to 30% below is 10%, 31% to 40% below is 15%, and more than 40% below is 20%. Recovering possession for sale or personal use requires twelve months notarised notice under Law No. 26 of 2007 as amended by Law No. 33 of 2008.
Cresco Real Estate LLC is a licensed UAE brokerage, RERA ORN 34288, with a US office in Los Angeles. We are not tax advisers, attorneys or licensed financial advisers in any US state. Everything above is general information about published laws and regulations, current as at 24 August 2026, and rates and thresholds change. Verify every figure against the issuing authority and take advice from your own CPA and attorney before you transact.
Dubai head office. US office in Los Angeles. A licensed UAE brokerage, RERA ORN 34288, that will put the risks, the tax and the comparable transactions in front of you before you sign. Bring your CPA. We will work with them.