Court Order Temporarily Halts NYC’s Pied-à-terre Tax Rollout

A state court judge issued a temporary restraining order on Monday to halt New York City’s pied-á-terre tax rollout.

The order came in response to a lawsuit filed Friday in Richmond County Supreme Court by former Deputy Mayor Randy Mastro on behalf of three homeowners challenging the implementation of its new tax on non-primary residences with home values above a certain threshold. 

In a signed order, Judge Wayne M. Ozzi temporarily ordered the city to take down the list of 900,000 homeowners published to the Department of Finance website and halt further actions in collecting the tax based on the published list or the notices mailed to 17,000 homeowners over the last several weeks. The city is also limited from enforcing the deadline it gave to appeal a notice of Aug. 21, or its later extension to Sept. 18. 

The temporary restraining order will remain in effect until a hearing scheduled for Aug. 31.

“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,” a spokesperson for the Mayor’s office said in a statement. “This surcharge asks those who own second homes valued at $5 million or more to contribute their fair share to the city they benefit from. The Law Department will appeal the ruling immediately which will stay the order, and the City will continue with the pied-a-terre’s implementation.”

The tax went into effect on July 1, targeting single-family homes valued at $5 million or more and condos and co-ops valued at $1 million or more by the Department of Finance, and that are deemed non-primary residences. 

The lawsuit claimed that the city’s rollout of the tax did not follow statutory requirements for identifying taxable homes and that it “arbitrarily and capriciously foisted onto New York City residents the burden of proving they are not subject to the Surcharge.”

The suit claims that the city did not follow its statutory obligations when it asked homeowners to appeal a potential tax, pointing to the state law that requires the city to use “information available,” which includes tax return records made available by the State Department of Taxation and Finance. 

Instead, the city posted a list of 900,000 home addresses to the DOF website which it referred to as a Supplemental Roll that could be used to identify properties potentially subject to the tax, and also sent notices to a more targeted list of roughly 17,000 homeowners informing them that they may be subject to the tax. 

Two of the plaintiffs, Rachel O’Brien and Carmine Morano, appeared on the list published on the DOF’s website. The third plaintiff, Simon Hedley, received a notice in the mail despite claiming to maintain a primary residence in Chelsea. 

The city later attempted to clarify that the “vast majority” of residences on the Supplemental Roll would not be subject to the tax. 

Ben Miller contributed reporting.

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