Politics 5 min read By Arthur Ellington
Judge Orders New York City to Restart Pied-à-Terre Tax Rollout
A Staten Island judge has thrown out New York City's rollout of its pied-à-terre tax, ordering the Mamdani administration to cancel notices sent to property owners and restart the process. The ruling comes as billionaire Steve Wynn and former Commerce Secretary Wilbur Ross launch a separate constitutional challenge to the tax itself.
A New York judge has thrown out New York City's rollout of its new pied-à-terre tax, ordering Mayor Zohran Mamdani's administration to cancel the notices it sent to property owners and restart the process of determining who owes the surcharge. State Supreme Court Justice Wayne Ozzi ruled that before deciding a property is a second home subject to the tax, the city must review all the information available to it and produce the records backing its claim. He did not rule on whether the tax itself is legal.
The decision, issued on Tuesday in Staten Island, deals a significant blow to one of Mamdani's signature tax-the-rich promises. The city had been counting on at least $500 million a year from the surcharge, which took effect on 1 July. It applies to one-, two- and three-family homes worth more than $5 million, and to condos or co-ops worth more than $1 million, when they are not the owner's primary residence.
In July, about 17,000 owners received notices flagging them as possibly owing the tax. The city admitted it did not check owners' income tax filings before mailing the warnings. Once it did, thousands of the flagged properties turned out to be primary residences. The lawsuit, brought by Randy Mastro, who was first deputy mayor under Eric Adams, on behalf of three homeowners, does not challenge the tax itself, only how the city's Department of Finance carried it out.
Mastro's suit makes three claims: that state law required the department to make an individual determination for each property before mailing a notice, and it skipped that step; that the city made homeowners prove they did not owe the tax instead of doing that work itself; and that nothing in the law allowed the city to publish an online database of more than 900,000 properties with owners' names and addresses. Mastro said in August that he received one of the notices himself, despite living in Manhattan for decades. «I got one, and everyone knows I'm a New Yorker,» he said. He has sued the Mamdani administration repeatedly since leaving City Hall.
Matt Rauschenbach, a spokesperson for the mayor, said the city would seek an automatic stay of the ruling by filing an appeal. «The pied-à-terre surcharge is about a basic principle of fairness: If you can afford a luxury second home in New York City, you can afford to pay your fair share for the schools, streets, and parks that make this city work,» he said. «Today's decision is wrong, and we will invoke a stay of the injunction. With a stay, we will continue implementing the surcharge fairly, efficiently, and in full compliance with the law, as we have since day one.»
The city is expected to invoke an automatic stay by filing an appeal on Tuesday evening, according to a source with knowledge of the city's plans. A spokesperson for Governor Kathy Hochul said she continues to believe that people who can afford a multimillion-dollar second home in New York City can afford to pay their fair share.
The ruling comes as the tax faces a separate legal challenge from billionaire Steve Wynn and former Commerce Secretary Wilbur Ross. On Monday, Ross, his wife Hilary Geary Ross, and casino developer Wynn sued the state over the tax. While Mastro's case targets the rollout, their suit targets the tax itself, arguing it is unconstitutional because it falls only on people who do not live in New York City.
Ross said the ruling did not surprise him. «I had told you I was very confident that we were on the right side of the law,» he said. «I'm grateful that he did it so quickly, because a lot of people have been on pins and needles about this whole thing. Now undoubtedly there will be an appeal filed, so it's not necessarily 100% over. But we're certainly off to a good start.»
Mastro said in a statement that the court «recognized we were right all along.» He said the city must now decide owner by owner who owes the surcharge before demanding payment. The city can appeal the ruling.
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