Judge pauses pied-à-terre tax rollout for NYC homeowners

The pied-à-terre tax is on hold after a Staten Island judge ordered New York City to pull a 960,000-property roll from public use.

Judge Wayne Ozzi entered the temporary restraining order Monday, three days after Rachel O’Brien, Carmine Morano and Simon Hedley sued over the city’s rollout. The order does not decide whether the surcharge itself is lawful; it freezes key steps while the court reviews how the Department of Finance identified affected owners.

Ozzi order removes tax roll

Ozzi directed the Department of Finance to remove the tax roll of 960,000 properties that the city published last month as part of the new surcharge program. The court also barred the city from taking additional enforcement action tied to warning notices already mailed to 17,000 homeowners.

The next hearing is set for the afternoon of August 31, giving the city a narrow window to contest the pause. Until then, the administration cannot rely on the published roll or push forward with enforcement based on the mailed notices.

Residents dispute residency notices

The plaintiffs are New York City residents who say they were wrongly flagged as possible pied-à-terre owners and forced to document that they live in their homes. Their lawsuit targets the administration of the surcharge, not the Legislature’s authority to create it.

State law requires the Department of Finance to make an initial determination using available records, including tax returns, property assessments and other official data. The complaint says the city reversed that process by putting the practical burden on homeowners to disprove nonresident status.

Randy Mastro, a lawyer for the plaintiffs, said the ruling protected homeowners who should not have been swept into the process.

"We are very gratified by the judge’s decision, which has vindicated the rights of hundreds of thousands of New York City homeowners who were subjected to a process they never should have been a part of in the first place,"

Mastro said.

$5 million homes face surcharge

The surcharge applies to homes valued at $5 million or more, and to co-ops and condos valued at $1 million or more, when the owner does not use the property as a primary residence. The tax took effect July 1, making Monday’s order an early procedural setback for Mayor Zohran Mamdani’s administration.

Mamdani has presented the tax as part of his campaign pledge to raise more revenue from wealthy property owners to support his agenda. Matt Rauschenbach, a spokesman for Mamdani, said the city disagrees with the ruling and will defend the program.

"We disagree with today’s ruling, but we are confident in both the pied-à-terre surcharge and the City’s ability to implement it fairly and effectively,"

Rauschenbach said. He added that the surcharge asks owners of second homes valued at $5 million or more to contribute more to the city where they hold property.

Appeal will set rollout pace

The city’s Law Department intends to appeal immediately, according to Rauschenbach. If an appeal lifts the temporary restraining order, the Department of Finance could restore the roll and resume the process of identifying owners who may owe the surcharge.

If the order remains in place through the August 31 hearing, the city faces a slower enforcement timetable while luxury homeowners, co-op boards and condo associations watch for clearer residency standards. The immediate test is administrative: whether New York can separate second homes from primary residences before it tries to collect the new tax.