A state judge has temporarily blocked a pied-à-terre tax that would impose a surcharge on second homes in New York City. The tax, announced in April by New York City Mayor Zohran Mamdani and New York Governor Kathy Hochul, was expected to generate $500 million in annual revenue.
The surcharge applies to individuals who own, but do not reside full-time in, houses valued at more than $5 million or condominium and cooperative units worth at least $1 million. Mayor Mamdani argued that revenue from these properties would help pay for safer streets, stronger schools and other city services.
Three New York City homeowners filed a lawsuit last week against the mayor and the city’s finance director. The plaintiffs are not challenging the legality of the tax itself, but are contesting how the Mamdani administration implemented it.
The homeowners allege the city incorrectly identified their properties as potential tax liabilities despite those homes serving as their primary residences. During the process, the city sent notices to 17,000 addresses.
Court ruling and city response
New York State Supreme Court Judge Wayne Ozzi issued the temporary pause, ruling that the notices caused irreparable harm. The judge found that the city, rather than property owners, was required to make the initial determination regarding tax liability.
Under the current order, the city is barred from issuing further notification letters to homeowners or maintaining a public list of properties. The city has published a tax roll involving approximately 960,000 owners, though other reports cite a list of over 900,000.
Matt Rauschenbach, a spokesperson for Mayor Mamdani, said the administration disagrees with the ruling but remains confident in the surcharge and its ability to be implemented fairly. The Law Department intends to appeal the ruling immediately.
Mayor Mamdani stated that only about 17,000 homeowners in a city of 8.5 million people are potentially affected. Meanwhile, critics—including business leaders, Republicans, and some moderate Democrats—have warned that taxing wealthy non-residents could lead to them leaving New York City.
The court has ordered the defense to submit an order to show cause by Aug. 24, with plaintiffs’ replies due Aug. 27. Oral arguments are scheduled for Aug. 31.
