What is a Pied-à-Terre?

The meaning of pied-à-terre translates to “foot to the ground” in French. In real estate, pied-à-terre refers to a secondary residence in a large city some distance from an individual’s primary home. In New York City, you’ll find pieds-à-terre in a range of prices, bedroom sizes, and locations, from lavish penthouses near Central Park to more affordable one-bedroom units in the East Village. You’ll also find various ownership arrangements for pieds-à-terre, including condos and coops.

What is a Pied-à-Terre?

The definition of pied-à-terre differs from a traditional vacation home, as many residents use them for temporary living space when working or visiting the city for a long weekend. Pieds-à-terre can fulfill a need for part-time city-dwellers, from retirees visiting family on a regular basis to city workers looking to avoid longer workweek commutes from their primary homes in the suburbs.

Anyone traveling between multiple geographic locations for work, such as between coasts, may also consider a pied-à-terre as an alternative to frequent hotel stays. Smaller than a typical vacation home, pieds-à-terre provide a more comfortable living space and can cost less compared to nightly or weekly hotel rates. In fact, many pieds-à-terre come with perks that rival hotels themselves, such as concierge services, spa & fitness centers, resident lounges, and rooftop bars. Since these residences serve as secondary homes, owners can travel lightly with as little as a laptop bag and a small suitcase.

How Can you Find a Pied-à-Terre in New York City?

Pieds-à-terre owners often buy in large cities with a thriving business district or an active cultural arts scene, such as those found in London, Hong Kong, San Francisco, and New York. Within these cities, buyers may gravitate toward particular locations based on where they work or narrow their search to areas in close proximity to a theater or restaurant district.

Primary neighborhoods in Manhattan that attract interested pied-à-terre buyers include the Upper East Side, Soho, and Midtown. Recent developments in Brooklyn also offer pieds-à-terre, appealing to potential buyers who prefer a more residential atmosphere. Buyers can specifically use the pied-à-terre filter to search for applicable listings on RealtyHop.

Agents typically disclose rules and important notes regarding pieds-à-terre in their listing description. Buyers can ask the listing agent or their real estate agent about any part-time residency rules before scheduling a tour of the unit.

Are Condos a Better Option as a Pied-à-Terre in New York City?

Condos and co-ops seem particularly well-suited for owners of secondary homes, due to their smaller floor plans, location, and resident amenities. However, condos and co-ops may have rules that restrict or prohibit part-time residents.

Why do some condos or co-ops frown upon part-time residents? Vacant properties can pose certain liabilities when leaks or other issues with the unit go undiscovered until larger problems arise.

While pieds-à-terre can benefit the local economy, they also cause available units to sit unoccupied for extended periods, affecting the housing supply. According to the most recent New York City Housing and Vacancy Survey (2021), 102,900 housing units in the city are reserved for occasional use. Neighborhoods with a relatively large number of secondary, occasional use homes may then offer only limited housing to those seeking a full-time residence. With the current housing shortage contributing to higher asking prices, those seeking full-time residence can grow frustrated with the surplus of options for pieds-à-terre buyers.

Strict Residency Requirements for Co-ops Lead many Pieds-à-Terre Owners to Condos

Due to relatively stringent co-op residency requirements, you may find more pieds-à-terre in condo buildings. Some co-op boards do not allow pieds-à-terre whereas others may permit them on a case by case basis. Even then, many high-end co-ops have rules in place that make it difficult for owners to rent out their pied-à-terre as they please. This may include limits on short term rentals or a requirement for owners to live in the unit for two to three years prior to listing it as a rental property.

Prospective buyers typically find it easier to acquire a pied-à-terre in a condo rather than a co-op. They can quickly complete the buying process and start using the property sooner.

What Pied-à-Terre Buyers Should Know About Owning a Second Home

If you’re considering a pied-à-terre in New York, it’s important to understand the financial aspects of owning a second residence before you make an offer. Some important items to consider include:

Mortgage Requirements

Buying a secondary residence could also require more stringent requirements for a mortgage. Interest rates may run higher for second homes compared to a mortgage on a primary residence and a buyer may need a high credit score and/or a larger down payment in order to qualify for financing on a second home. Lenders may also require that you spend a certain amount of the time living in the residence each year to consider it a second home instead of an investment property.

Added Costs

The costs to maintain two homes stretch beyond dual mortgage payments, including items such as additional payments for property taxes, utilities, monthly association fees, and maintenance. Just because you’re not living in the home does not mean that you can avoid paying many of these costs. You will also need to speak with your insurance agent about any added risks you’ll need to factor into the policy if the residence sits vacant for long periods.

Local Laws and Building Regulations

Check with your real estate agent regarding local laws and building regulations for pieds-à-terre before proceeding with your purchase. If you plan to lease or sublet the unit when you’re away, make sure you understand any local residency restrictions.

Potential Tax Implications

You may also need to treat the interest paid on a mortgage for your second home differently for tax purposes. As long as the second home does not qualify as a rental property, the IRS allows owners to deduct home mortgage interest for primary and secondary homes on Schedule A, Itemized Deductions. Your mortgage origination date affects how much interest you can deduct. Those who own multiple secondary homes can only select one to receive a mortgage interest dedication.

Tax payers who own a second home that they rent out for a portion of the year must follow federal tax rules and report rental property income and losses. If a pied-à-terre owner rents the property when they are not in town and also uses the property more more than 14 days or 10% of the total number of rental days, they must abide by tax regulations.

Those considering purchasing in New York state should consider a potential pied-à-terre tax. While not year in effect, state legislators are considering adding a tax for residents of high-end homes in large cities.

Conclusion

A smaller, second home offers a practical alternative for those who travel to the city frequently for work or leisure. If you’re considering buying a condo to use when you spend time in New York City, you can start your search by browsing online listings. You may also want to ask your real estate agent for help targeting specific neighborhoods or buildings that welcome pied-a-terre owners. By ensuring that you understand the residency and rental requirements ahead of time, you’ll avoid any issues post-settlement.