A sweeping tax notice landed in thousands of mailboxes, but a judge says the city took the wrong approach.
The ruling threatens a high-profile revenue plan while an immediate appeal leaves homeowners facing continued uncertainty.
A Staten Island judge ordered Mayor Zohran Mamdani’s administration to redo its rollout of New York City’s pied-à-terre tax.
Justice Wayne M. Ozzi sided Tuesday with homeowners who challenged how the city identified properties potentially subject to the surcharge.
The ruling addressed the implementation process, not the legality of the tax itself.
The surcharge targets non-primary residences valued above $5 million and certain co-ops valued at $1 million or more.
It formed part of Mamdani’s fiscal 2027 budget strategy for closing the city’s budget gap.
Governor Kathy Hochul backed the measure, which Mamdani’s administration presents as a way to fund public services.
Three petitioners argued that officials flagged their primary residences as potentially taxable second homes.
That error, they said, forced them to prove they lived in their own homes or face a possible surcharge.
In July, the Department of Finance posted a tax roll listing names and addresses of more than 900,000 homeowners.
The list included property owners who were not subject to the surcharge, according to the report.
Ozzi ordered the city to remove that roll and replace it with one identifying properties actually subject to the tax.
The city had also mailed approximately 17,000 notices telling residents to seek exemptions or face the surcharge.
The judge ordered those notices canceled and set conditions for any replacements the city sends.
Officials must make an individualized initial determination using available information before mailing a new notice, the ruling said.
That sequence matters for homeowners because it places the initial identification work on government officials.
It also narrows the chance that a resident must correct a city error under threat of a tax bill.
The decision came about a week before an October 6 deadline for homeowners to claim exemptions.
Attorney Randy Mastro, representing the plaintiffs, said the administration had wrongly shifted its burden onto homeowners.
He argued that officials should have used their available records to determine who actually owed the surcharge.
The city’s response was swift: a spokesman for Mamdani called the decision “wrong.”
Spokesman Matt Rauschenbach said owners of luxury second homes should contribute to schools, streets, and parks.
He described the policy as a matter of fairness and accused wealthy opponents of protecting their privilege.
That defense addresses the tax’s purpose, while the court’s ruling focuses on how the city administered it.
The city appealed Tuesday evening, and the appeal invoked a stay of the lower court’s order.
That means officials can continue implementing the surcharge while the order to redo the rollout is paused.
Homeowners therefore face a ruling in their favor without an immediate halt to the city’s current process.
The appeal also leaves the timetable uncertain for any corrected tax roll or replacement notices.
Ozzi’s decision follows complaints over both the scope of the public roll and the accuracy of mailed warnings.
A list of more than 900,000 names and addresses raises privacy concerns when many owners owe nothing.
The mailed notices pose a separate issue because an exemption demand can require time and paperwork from recipients.
Neither the judge’s ruling nor the plaintiffs’ victory abolishes the tax already enacted into law.
A separate lawsuit filed Tuesday challenges the law itself on constitutional grounds.
Suffolk County homeowners and a co-op allege discrimination against nonresidents, retroactive application, and unconstitutional burdens.
Those are allegations in a different case, not findings made by Ozzi in the rollout dispute.
That lawsuit also cites confusion, privacy concerns, and the alleged shift of responsibility onto homeowners, CNN reported.
The two cases put the city’s fiscal plans alongside questions about notice, accuracy, and legal authority.
This article may contain commentary which reflects the author's opinion.
