NY Appeals Court Clears Way for Mayor Mamdani's Pied-à-Terre Tax

An appeals court in Brooklyn ruled Wednesday in favor of New York City Mayor Zohran Mamdani’s pied-à-terre tax, reversing a lower court decision and clearing the city to proceed with collecting an annual surcharge on second homes valued above $5 million. The Appellate Division, Second Department overturned a ruling issued last month by Staten Island Supreme Court Justice Wayne Ozzi that had found the city mishandled the rollout. The city immediately appealed that September ruling and continued rolling out the tax as the lawsuit proceeded.

The tax, proposed by Mamdani and Gov. Kathy Hochul in April, targets one- to three-family homes, condominiums and co-ops owned by people who maintain a separate primary residence. The lawsuit decided Wednesday did not challenge the legality of the tax itself, but rather the notices the Finance Department sent to roughly 17,000 residents alerting them they might be subject to the surcharge.

Homeowners lacked standing, court finds

The plaintiffs had been notified over the summer that they could be subject to the tax, only to later learn they were exempt, yet proceeded with the challenge anyway.

Appeals court rules Mamdani's pied-à-terre tax can move forward

In a statement, Mamdani welcomed the decision, saying, “From day one, those with the most have attempted to use every legal avenue available to shield their wealth and avoid contributing more to our city.” He added that owning a second home worth over $5 million “should come with a responsibility to the city that makes it valuable,” and vowed to continue defending the law against ongoing challenges in Suffolk County. Our commitment has not changed. Mamdani said in July that the tax was intended to provide the city with needed “long-term solutions” to its fiscal challenges, and that the Suffolk County suits were “brought by some of the same uberwealthy interests whose arguments just lost in court today.” He said, “The pied-a-terre surcharge asks those who can afford luxury second homes to contribute toward the safer streets, cleaner parks and essential public services that every New Yorker deserves.”

Constitutional challenges remain

Randy Mastro, the attorney representing the homeowners, criticized the rollout as “lawless and chaotic” and “admittedly botched,” and said the court took a “procedural offramp” to avoid addressing the merits. He expressed confidence that the tax’s constitutionality, the main argument in separate suits including one in Suffolk County, would be decided next month and ultimately struck down. Mastro, who served as the city’s first deputy mayor under former Mayor Eric Adams, did not say whether he planned to appeal, but lamented that the rollout would “go unremedied.”

The administration of Mayor Zohran Mamdani appealed a ruling blocking the rollout of a tax on high-end second homes — Photo: nytimes.com

The tax was embraced by Mamdani as a way to fulfill his campaign promise to “tax the rich” and help close the city’s budget gap. While Wednesday’s ruling marks his first major legal victory on the measure, the surcharge still faces other legal challenges before it can be fully implemented.