By: Emily Nixon
In response to multiple legal challenges, New York City (NYC) Mayor Zohran Mamdani has been ordered by New York (NY) State Supreme Court Justice Wayne Ozzi on Sept. 29 to redo the “pied-à-terre” tax, which taxes non-primary residence properties by an additional percentage based on their value.
“The city’s notice process was inherently defective and misleading,” Lawyer Randy Mastro told Pix11. “The judge’s decision couldn’t be clearer on how to do that.”
Justice Ozzi found that the NY Department of Finance (DOF) mishandled the rollout of the new tax plan during its notification stage, and must reform the identification process for each property before sending new notices to the properties that will be subject to the tax.
The tax law itself has not been changed by the ruling, only how the new surcharge will be distributed to those fined.
As part of the rollout of the new tax, the DOF published a list of properties, including the property owners’ names, on their website via a portal, in addition to mailing notices to properties that might be subject to the new charge.
A group of homeowners from various counties who either appeared on this list or were sent notices by the DOF sued NYC, DOF, and Mayor Mamdani, claiming that the list contained, and notices were sent to, properties that were not subject to the new tax.
One of the main contentions in the lawsuit was whether or not the homeowners, also called the petitioners, had proper justification to sue the city.
In the lawsuit, NYC defended its notification practices, claiming the lists were built on 2024 tax returns to determine whether or not the property was a primary residence. This list is referenced in the lawsuit as a “supplemental roll,” according to court documents. In addition, the information published has an extensive history of being considered public information, and “caused no harm” to the homeowners published within it.
“The published roll included over 900,000 distinct properties, including effectively all 1-3 family homes, residential condominiums, and select cooperatives. As part of the publication of the Supplemental Roll on its public page, DOF noted that the publication was ‘related to’ the new surcharge/pied-a-terre tax,” stated the document. “It is not disputed that 98-99% of the properties on said Supplemental Roll are not subject to the surcharge.”
The group of homeowners alleged that this list counted as “doxxing” the owners and “increased their exposure to harassment and other unwarranted intrusions,” according to the court documents.
Regarding the mailed notices, NYC claimed that because the petitioners challenged the notices as granting exemptions to the charge, or as not subjecting them to the charge at all, the lawsuit is “moot,” or not legally justiciable.
The homeowners alleged that the DOF “conveniently focus[ed] on each individual petitioner after bringing this [lawsuit]” to weaken their legal standing, while continuing to issue new notices to other property owners who may or may not be subject to the charge.
“The issue is likely to be repeated as respondents [NYC, Mamdani, and DOF] are still sending surcharge notices to over 10,000 property owners: that time constraints and respondents’ continual changes to status will make it easier for their actions to evade review; and the issue as novel as the pied-à-terre tax is new, the product of original statutory provisions that have never been subject to review,” stated the ruling.
NY State Supreme Court Justice Ozzi wrote that it was “better to address the issues [with the pied-à-terre tax] now rather than later,” in the document.
Ozzi ordered the DOF to remove the list of properties from its website, and can only replace it with properties that are proven to be subject to the surcharge. Ozzi also ordered that DOF must cancel all previous notices about the surcharge, and only issue new ones once “individualized initial determinations, utilizing any and all resources and information available to DOF, and other factors identified by its rules” are done.
In the new notices, DOF must identify which documents or records were used to make the determination of whether or not the property is or is not a primary residence, as well as advise property owners of their right to challenge the determination by DOF.
After the ruling by Ozzi, NYC immediately appealed the decision, “triggering a stay that allows the Finance Department to continue the existing rollout while the Appellate Division reviews Ozzi’s decision,” according to LawCommentary.com.
During a press conference announcing the modernization at Nostrand Houses, Mayor Mamdani shared his sentiments about the new ruling.
“I do believe that it is legal, and it is right to have a surcharge on the taxation of those homes, so we can provide for everyone in the city,” said Mamdani. “Because when I look at the residents of Nostrand Houses, when I look at the residents of NYCHA across our city, I see people who have poured themselves into this city, but they often haven’t received that love back.”
Mamdani doubled down that this new tax was the next best move for NYC.
“Raising 500 million by taxing those who can afford a second home worth more than 5 million, to then put that money back into every New Yorker’s life,” said Mamdani. “I think that’s not only the right thing to do – it’s the thing that we have to do.”