NYC's pied-à-terre tax faces mounting legal pushback
A group of homeowners is suing the city and the Department of Finance over how officials launched the surcharge, which applies to certain second homes valued at $5 million or more.
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New York City’s rollout of its new pied-à-terre tax is facing mounting legal pushback, with homeowners accusing the Mamdani administration of bypassing state requirements.
A group of homeowners is suing the city and the Department of Finance over how officials launched the surcharge, which applies to certain second homes valued at $5 million or more. The plaintiffs say the city wrongly flagged primary residences as secondary homes, potentially subjecting them to the new tax.
In a letter to Justice Wayne Ozzi, attorney Randy Mastro, representing three homeowners and a former first deputy mayor, accused the city of “sharp practices” and attempting to sidestep a temporary restraining order that was issued.
The judge’s order blocks the city from enforcing deadlines or taking further action based on notices sent to roughly 17,000 property owners until a hearing scheduled for Aug. 31.
“The City Respondents’ threat to continue implementing the Surcharge is obviously a vow to ignore the prohibitory portions of this Court’s TRO order. That is lawless,” Mastro wrote.
The city filed an affirmation asserting that its notice of intent to appeal triggers an automatic stay under state law, allowing it to continue implementing the tax.
Mastro disputes that interpretation, citing Second Department case law that limits automatic stays to orders requiring affirmative action, not prohibitory injunctions like the one issued in this case.
Mayor Zohran Mamdani defended the city’s position on Monday, saying the surcharge is both legal and necessary.
"We are confident in our position," Mamdani said after the judge's ruling on Monday, "that is a confidence coming from both the legality of the city's actions as well as the importance of a surcharge on secondary homes worth more than $5 million, a surcharge that will help fund safer streets, that will help fund stronger schools, and it will help fund the city that New Yorkers deserve."
The pied-à-terre surcharge is expected to generate about $500 million annually to help close the city’s budget gap. It applies to high-value second homes and certain condos and co-ops valued at more than $1 million.
A hearing on the lawsuit is set for Aug. 31. Homeowners who believe they were incorrectly flagged have until Sept. 18 to apply for an exemption.
