Judge temporarily blocks Mamdani's pied-à-terre tax on NYC second homes

Tax rollout paused

On Monday, August 10, Judge Wayne M. Ozzi of the State Supreme Court on Staten Island issued a temporary restraining order halting New York City's pied-à-terre tax, a surcharge on second homes proposed by Governor Kathy Hochul and backed by Mayor Zohran Mamdani. The tax, announced in April, was projected to generate $500 million in annual revenue for a city facing a budget gap. It applies to people who own but do not reside full-time in any house worth more than $5 million, or a condominium or cooperative unit worth at least $1 million.

The order came in response to a lawsuit filed Friday by a group of homeowners, represented by former First Deputy Mayor Randy Mastro, who argued that the city mishandled the rollout rather than challenging the tax's legality. The city had published a data set on the Department of Finance website listing nearly one million properties that "may be subject to the charge" and sent letters to roughly 17,000 property owners informing them they might be taxed, with a September 18 deadline to file exemption paperwork.

Judge's reasoning

Judge Ozzi, a Democrat, said in court on Monday afternoon that the city had created conditions meeting the standard of irreparable harm. He took particular issue with the notices sent to 17,000 homeowners.

Sending out notices to 17,000 homeowners who might be subject to a surcharge doesn't satisfy the intent of the legislation.

Notices should state what the records show. They are a treasure trove of information. I can't unring the bell, but I can stop any further notices going out.

The complaint filed on Friday stated that "the city has arbitrarily and capriciously foisted onto New York City residents the burden of proving they are not subject to the surcharge." The homeowners argued that officials should have worked harder to determine, using existing records, who might have to pay the tax before publishing the data set.

What the order requires

Under Judge Ozzi's order, the city must remove the public list of approximately 960,000 properties from the Department of Finance website. The city is barred from taking further action based on that list or on the notices mailed to the 17,000 property owners. The order also blocks the city from enforcing a September 18 deadline for homeowners to seek an exemption while the restraining order is in effect. The order remains in place until at least August 31, when both sides are expected back in court.

City plans appeal

Matthew Rauschenbach, a spokesman for City Hall, said the Law Department would appeal the ruling immediately. He said the appeal would stay the judge's order. The mayor's office criticized the ruling and confirmed plans to challenge it.

We disagree with today's ruling, but we are confident in both the pied-à-terre surcharge and the city's ability to implement it fairly and effectively.

Political context

The tax has divided opinion along political lines. Supporters, including progressive Democrats, see it as a way to raise revenue from affluent property owners in a city grappling with a high cost of living, delivering on Mamdani's promise to "tax the rich." Critics, including prominent business leaders, Republicans, and some moderate Democrats, have warned that new taxes on wealthy part-time residents who maintain apartments and townhouses in New York but do not consider it their primary home will lead the very wealthy to abandon the city. The policy debate comes as Democrats seek to address voter concerns about affordability ahead of this year's midterm elections. Mamdani's critics accuse the democratic socialist mayor of targeting the wealthy, while supporters have welcomed the tax as a helpful revenue measure.