A Staten Island judge on Tuesday ordered New York City to cancel the tax notices it mailed to about 17,000 property owners and to take down an online list of more than 900,000 homes.
State Supreme Court Justice Wayne M. Ozzi of Richmond County ruled that the Department of Finance may replace the published roll with one “reflecting those properties actually subject to the surcharge” and that new notices may be mailed only after an “individualized initial determination utilizing any and all resources and information” available to the department. He did not rule on the legality of the tax itself.
“No crime is involved here, but homeowners are being substantially harmed and penalized needlessly by DOF’s method of implementing the Tax Law,” Ozzi wrote in a 22-page decision. He said the mailed notices “irresponsibly and unnecessarily caused homeowners to expend time and money” and that the department “unfairly shifted the burden to thousands of homeowners to prove their basic residency.”
The pied-à-terre tax took effect July 1 under a law Governor Kathy Hochul signed in May as part of the state budget. It applies to non-primary residences valued at $5 million or more for one-, two- and three-family homes and $1 million or more for condos and co-ops, with a surcharge starting at 0.8% and rising to 1.3% on properties valued at $25 million or more. The city expects about $500 million a year from it to fund Mayor Zohran Mamdani’s affordability agenda.
In late July the department mailed the notices and published owner names, addresses and property values for roughly 900,000 properties. The city conceded it did not check owners’ income tax filings before mailing, Fortune reported; once it did, thousands of flagged homes proved to be primary residences, and a department attorney said 4,000 of the 17,000 notified owners had been exempted. A judge temporarily blocked the rollout on August 10, and the city extended its deadline for owners to challenge their status to October 6. The city and state estimate about 10,000 properties will ultimately be taxed.
Randy Mastro, who served in top roles under mayors Rudolph Giuliani and Eric Adams, brought the suit for three homeowners, including Rachel O’Brien and Carmine Morano, the wife and father of Republican Councilman Frank Morano of Staten Island, according to Yahoo. “We’re gratified that the court has recognized we were right all along,” Mastro said. “Now the administration must go back and do what it should have done from the start: use all the information at its disposal to make an individualized ‘initial determination’ about who truly owes this surcharge before demanding that they pay it.”
Mastro told Fortune he received a notice himself despite decades in Manhattan. “I got one, and everyone knows I’m a New Yorker,” he said. Mamdani responded in August: “There are few things more certain in New York City than death, taxes, and Randy Mastro filing a lawsuit against this administration.”
City Law Department chief Steve Banks had argued the suit should be dismissed because the homeowners were not harmed. “The case before your honor is not an actual case in controversy — it’s a policy dispute dressed up as a case in controversy,” he said at a hearing last month.
The city appealed the ruling on Tuesday evening, a city official told CNN, invoking a stay that pauses Ozzi’s order. “Today’s decision is wrong, and we will invoke a stay of the injunction,” mayoral spokesperson Matt Rauschenbach said. “The ultra-wealthy are fighting in court to avoid paying their fair share. They have filed lawsuit after lawsuit to protect their privilege, and we will not back down.”
In an April video announcing the tax, Mamdani pointed to Citadel chief executive Ken Griffin’s $238 million Billionaires’ Row penthouse, the most expensive home purchased in the United States when he bought it in 2019. “This pied-à-terre is specifically designed for the richest of the rich — those who store their wealth in New York City real estate, but who don’t actually live here,” he said.
Second lawsuit challenges the tax itself
On Monday, former commerce secretary Wilbur Ross Jr., his wife Hilary Geary Ross and casino developer Steve Wynn sued New York State in Suffolk County, arguing the tax “unlawfully discriminates against nonresidents.” All three live full-time in Florida, according to the complaint, which says the Rosses received a notice for an additional $83,531.52 on their co-op and Wynn for $183,094.69 on a Manhattan property.
“I had told you I was very confident that we were on the right side of the law,” Ross, who is not part of the Staten Island case, told Fortune minutes after the ruling. “Now undoubtedly there will be an appeal filed, so it’s not necessarily 100% over. But we’re certainly off to a good start.”
“When Steve Wynn and Wilbur Ross try to cast themselves as sympathetic figures in a fight over paying their fair share on multimillion-dollar second homes, they’re making the case for the pied-à-terre tax as well as anyone could,” said Jen Goodman, Hochul’s director of rapid response.
The appeal, with its automatic stay, would let the city keep implementing the surcharge ahead of the October 6 exemption deadline. City Hall said it will also intervene in the Suffolk County suit to defend the tax.