new York
New York City’s planned tax on second homes suffered a major setback Tuesday after a Staten Island judge ruled in favor of plaintiffs challenging the rollout.
The pied-à-terre tax, which imposes a surcharge on non-primary New York City residences valued at more than $5 million, as well as cooperatives valued at $1 million or more, was implemented as part of Mayor Zohran Mamdani’s FY 2027 budget in an effort to close the city’s budget deficit. Governor Kathy Hochul had supported the idea.
Mamdani, who took office in January, promised to “govern as a democratic socialist” and campaigned on making the city more affordable and improving the daily lives of New Yorkers. In his first months in office, he froze rents for tenants of rent-stabilized apartments across the city.
The plaintiffs did not challenge the legality of the tax itself, but rather its application. Three petitioners alleged that the city incorrectly “identified their homes as potentially subject to the surcharge,” despite it being their primary residence.
The city’s Department of Finance website published a tax roll in July that included the names and addresses of more than 900,000 New York City homeowners, even though they were not subject to the tax.
Richmond County Judge Wayne M. Ozzi ruled that the docket must be removed from the website, but can be replaced with a secondary docket “reflecting the properties actually subject to the surcharge.”
About 17,000 notices were also sent to residents early in the process, informing them that they would have to apply for an exemption or be subject to the tax.
Previously sent notices must also be canceled, Ozzi ruled. New notices can be mailed in accordance with a list of rules, including that they can only be mailed after “an individualized initial determination using all resources and information” available to the Department of Finance.
“We are pleased that the court recognized that we were right all along. The fact is that this administration failed to follow state law when it put the onus on New York City homeowners to prove they lived in their own homes or face a new surcharge,” Randy Mastro, an attorney representing the plaintiffs, said in a statement following Tuesday’s ruling.
“Now the administration must go back and do what it should have done from the start: use all the information at its disposal to determine on an individual basis who actually owes this surcharge before requiring them to pay it.”
A spokesperson for Mamdani said in a statement that the decision was “wrong.”
“The pied-à-terre surcharge addresses a fundamental principle of fairness: If you can afford a luxury second home in New York, you can afford to pay your fair share for the schools, streets and parks that make this city work,” said Matt Rauschenbach.
“Our administration fights every day to meet the expectations of working New Yorkers. The ultra-rich are fighting in court to avoid paying their fair share. They have filed lawsuit after lawsuit to protect their privileges, and we will not back down.”
A city official told CNN he planned to invoke a stay of the decision Tuesday evening.
This is a developing story and will be updated.
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