A Staten Island judge on Tuesday rejected New York City’s new pied-à-terre tax. He ordered it from Mayor Zohran Mamdani asked the administration to cancel the notices sent to property owners and restart the process of deciding who owes the award.
State Supreme Court Justice Wayne Ozzi ruled that before deciding whether a property is a taxable second home, the city must examine all the information available to it and provide the documentation supporting its claim. He has not commented on whether the tax itself is legal.
“The pied-à-terre premium is about a fundamental 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 come alive,” said Matt Rauschenbach, a spokesman for the mayor Assets in a statement. “Today’s decision is wrong and we will seek a stay of the injunction. With a stay, we will continue to implement the award fairly, efficiently and in accordance with the law, as we have done from day one.”
“New York is a city for the many – not a tax haven for the wealthy few,” he continued. “Our government fights every day to provide for working New Yorkers. The super-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.”
“While this tax administration lawsuit is a matter for the city and the courts, the governor remains confident that people who can afford a multimillion-dollar second home in New York City can afford to pay their fair share,” said Jen Goodman, Emergency Relief Director for Governor Kathy Hochul Assets in a statement.
The city had counted to at least $500 million per year from the surcharge, one of Mamdani’s signature promises to tax the rich. It can be appealed.
The city is expected to file an appeal Tuesday evening, seeking an automatic stay of the ruling, according to a source familiar with the city’s plans.
The tax went into effect on July 1st. It applies to one-, two- and three-family homes valued at more than $5 million, as well as condominiums or cooperatives valued at more than $1 million if they are not the owner’s primary residence.
In July, about 17,000 property owners received notices warning them that they may owe taxes. The city admitted it did not review property owners’ income tax returns before sending out the warnings. It then emerged that thousands of the reported properties were primary residences.
Randy Mastro, who served as first deputy mayor under Eric Adams, filed the lawsuit on behalf of three homeowners. It does not question the tax itself, just how the city’s finance department did it.
Mastro makes three claims in his lawsuit: First, state law required the department to make an individual determination for each property before sending a notice, and it skipped that step. Second, the city required homeowners to prove they didn’t owe the tax rather than do the work themselves. Third, no 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 himself received one of the notices, even though he had lived in Manhattan for decades. “I have one and everyone knows I’m a New Yorker,” he said.
Since leaving city hall, he has repeatedly sued the Mamdani government. “There are few things safer in New York City than death, taxes and Randy Mastro’s lawsuit against this government,” Mamdani said in August.
On Tuesday, Mastro said in a opinion that the court “recognized that we were right from the start.” He said the city now has to decide, owner by owner, who owes the surcharge before demanding payment.
Assets called former Commerce Secretary Wilbur Ross minutes after the verdict. He is not involved in the Staten Island case, but brings his own challenge regarding the tax. On Monday: Ross, his wife Hilary Geary Ross and casino developer Steve Wynn sued the state also about taxes. While Mastro’s case targets the implementation, her lawsuit targets the tax itself. She argues that the tax is unconstitutional because it only falls on people who don’t live in New York City.
Ross said the verdict didn’t surprise him. “I had told you that I was very confident that we were on the right side of the law,” he said. “I’m grateful he did it so quickly because a lot of people are freaked out about this whole thing.”
“There will undoubtedly be an appeal now, so it’s not necessarily 100% decided,” he said, “but we’re definitely off to a good start.”