New York Appeals Court Clears Mamdani Second Home Tax to Move Forward

New York City can keep rolling out its new tax on second homes after an appeals court in Brooklyn dismissed a lawsuit over how the city introduced the charge on Wednesday.

A four judge panel of the Appellate Division, Second Department, voted unanimously to reverse a Sept. 29 ruling by Staten Island Justice Wayne Ozzi. The panel also dismissed the case over the rollout of the pied-a-terre tax, a surcharge on homes that are not used as a primary residence.

How the case began

Seven homeowners sued the city in August. They were represented by Randy Mastro, a former first deputy mayor. Their complaint focused on work by the city Department of Finance, which published a supplemental roll covering about 900,000 properties. The department also mailed roughly 17,000 notices to owners who might owe the surcharge.

The homeowners said the city had shifted the burden onto them. Instead of checking its own records first, they argued, the city made owners prove that they live in their homes.

Justice Ozzi ruled for the homeowners on Sept. 29. That decision stood for just over five weeks before the appeals panel set it aside on Wednesday.

Panel finds no concrete injury

The appeals judges found that the homeowners lacked standing to sue. Appearing on the supplemental roll, they said, did not by itself show a concrete injury. Receiving one of the mailed notices did not show one either.

The panel noted that the roll held much the same information as the tax assessments the city already publishes. It also found that the homeowners had not documented the costs they said they faced in applying for an exemption from the surcharge.

Mayor Zohran Mamdani welcomed the ruling. "Today, an appeals court rejected an attempt by the ultrawealthy to avoid paying their fair share and ruled in favor of the City in a lawsuit challenging the rollout of the pied-a-terre surcharge," he said.

Mastro took a different view of the decision. He said the court had avoided addressing the merits of the homeowners' claims, and he expressed disappointment with the outcome.

What the tax covers

The surcharge applies to homes that are not used as a primary residence. It covers single-family homes valued at $5 million or more. It also covers co-ops and condos worth at least $1 million.

State lawmakers passed the tax earlier this year at Mamdani's urging. Gov. Kathy Hochul signed it into law in May. City officials expect the surcharge to raise about $500 million a year.

The bigger fight is still ahead

Wednesday's ruling did not decide whether the tax itself is lawful. Two other lawsuits make that argument directly. They say the surcharge is unconstitutional because it discriminates against owners who live outside the city.

Arguments in those cases are scheduled for Dec. 1. In the meantime, the city's timetable is already running. The deadline to apply for an exemption was Oct. 13. The city plans to put the surcharge on property tax bills that come due on Jan. 1.

For now, the rollout goes ahead. The legal fight over the tax itself has not yet been heard.