A New York state judge has ordered the city to scrap its current rollout of a controversial secondary-home tax, citing flawed notification procedures and administrative overreach.
The court targeted the Department of Finance’s recent distribution of supplemental rolls and tens of thousands of individual mailings, mandating that the city rescind the notices and rebuild its taxpayer database using properly verified data.
The city quickly appealed, invoking a stay that pauses what would have effectively required restarting the rollout of a surcharge on pricey ‘pieds-à-terre.’
Matt Rauschenbach, a spokesman for Mayor Zohran Mamdani, said in a statement, “With a stay, we will continue implementing the surcharge fairly, efficiently and in full compliance with the law, as we have since day one.”
As reported, the ruling marks a major early hurdle for the high-profile pied-à-terre tax, which aims to generate $500 million annually by targeting luxury residential properties owned by nonresidents.
Plaintiffs—including prominent business figures and regional property owners—had argued that the rushed rollout unfairly penalized homeowners and unconstitutionally discriminated against out-of-state taxpayers.
The ruling, which sided with a group of homeowners who had sued the city, came a week before the October 6 deadline for homeowners who had been told they owed the tax to prove they should not be subject to the signature initiative of Mamdani’s administration.
In his ruling, Wayne Ozzi, a state Supreme Court justice in Richmond County, said the steps the New York City Department of Finance took to begin collecting the tax caused “confusion and dismay” and appeared to result from a rush to fill budget gaps, unfairly putting the burden on homeowners to prove properties were their primary residences.
The new tax is expected to generate $500 million annually for the city, America’s largest.
Last month, President Donald Trump called the tax a “dangerous political experiment” and said he was looking for legal options for the federal government to reverse it.
On Monday, former US Secretary of Commerce Wilbur Ross and casino mogul Steve Wynn, who own property in New York City, sued the city over the pied-à-terre tax in a Long Island court, arguing that the tax on secondary homes unconstitutionally discriminates against nonresidents.
As the legal showdown unfolds, the tax remains a flashpoint for wealthy property owners, state lawmakers and federal critics alike, heightening uncertainty for luxury real estate markets across the five boroughs.
