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New York City Mayor Zohran Mamdani’s new tax on second homes has suffered another setback after a state judge ordered the city to redo its rollout of the surcharge.
On Tuesday, State Supreme Court Justice Wayne Ozzi sided with New York City homeowners who challenged the Department of Finance’s implementation of the new pied-à-terre tax. The judge ordered the city to cancel roughly 17,000 notices sent to property owners, remove a supplemental tax roll containing more than 900,000 properties, and use updated information to determine which properties are actually subject to the surcharge.
Ozzi found that the city’s implementation “unfairly shifted the burden to thousands of homeowners to prove their basic residency.” He also wrote that homeowners were being “substantially harmed and penalized needlessly” by the process.
The city quickly appealed the ruling, triggering a stay that allows implementation to continue while the appeal proceeds.
The ruling follows months of problems surrounding the new tax.
As ATR previously reported, New York approved the pied-à-terre surcharge as part of the state’s FY 2027 budget after it was pushed by Mamdani and Gov. Kathy Hochul. The tax applies to certain New York City properties that are not used as primary residences.
For the 2026-27 and 2027-28 property tax years, one-, two-, and three-family homes valued by the Department of Finance at more than $5 million can be subject to the surcharge. Condos and co-ops face a much lower $1 million threshold.
The rates are substantial. Qualifying one-, two-, and three-family homes face rates ranging from 0.8% to 1.3%, while qualifying condos and co-ops face rates ranging from 4% to 6.5%. The surcharge comes on top of existing property taxes.
Mamdani and Hochul promoted the tax as a way to raise approximately $500 million annually from wealthy second-home owners to help address New York City’s budget problems. But the Department of Finance’s first attempt to identify the taxpayers responsible for that revenue swept in thousands of people who said the properties identified by the city were actually their primary residences.
The September 29 ruling is not the only legal challenge facing the tax.
Former U.S. Commerce Secretary Wilbur Ross and casino developer Steve Wynn have filed a separate lawsuit challenging the constitutionality of the surcharge. Both are Florida residents who own property in New York City. According to the lawsuit, Ross faces a potential surcharge of more than $83,000 on his Manhattan co-op, while Wynn faces a potential bill of more than $183,000. The plaintiffs argue that the tax improperly discriminates against nonresidents.
That case attacks the underlying tax itself, while the homeowners’ lawsuit concerns how the Mamdani administration implemented it.
The latest ruling also validates concerns raised during the first weeks of the rollout. ATR reported in August that the city had mailed approximately 17,000 notices and required affected homeowners to submit documentation establishing that their properties were primary residences. The city ultimately granted thousands of exemptions as questions mounted over how the original list had been assembled.
Now a judge has ordered the city to go back and determine who is actually subject to the surcharge before placing that burden on homeowners.
The pied-à-terre tax remains in effect, and the Mamdani administration is appealing the ruling. But less than three months after the city began implementing the surcharge, its rollout has already produced thousands of disputed notices, multiple lawsuits, an appeal, and a court order directing the city to start the process over.