Homeowners Sue to Halt New York City Pied-á-terre Tax Rollout

The first lawsuit against New York City’s messy pied-á-terre tax rollout has landed.

Three homeowners filed a lawsuit in Richmond County Supreme Court challenging New York City and the Department of Finance’s implementation of a new pied-á-terre tax, which seeks to assess an additional tax on non-primary residences with home values above a certain threshold.

The homeowners are seeking emergency relief to halt the city’s current efforts at identifying homeowners who will be subject to the tax, claiming that the city has “arbitrarily and capriciously foisted onto New York City residents the burden of proving they are not subject to the Surcharge.”

The lawsuit is not challenging the underlying state law.

Randy Mastro, former Deputy Mayor under Eric Adams, filed the suit on behalf of homeowners Rachel O’Brien, Carmine Morano and Simon Hedley, all of whom claim to have improperly received notices.

A spokesperson for Mayor Zohran Mamdani said in a statement that the city “is prepared to vigorously defend the city against this suit.”

The controversial 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 city’s efforts to identify secondary homes began in July, when the DOF sent notices to roughly 17,000 homeowners who it claimed may be subject to the new surcharge. The city gave respondents a deadline of Aug. 21 to appeal the notice before later extending the deadline to Sept. 18 after reports surfaced of homeowners incorrectly receiving notices.

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.

Only after those attempts does the law allow the city to notify homeowners of the tax and allow them to appeal, the suit claims. The complaint also criticized what it called the city’s “obvious over-inclusiveness” in its mass mailing efforts, pointing to analysis from former DOF Commissioner Martha Stark estimating that roughly 24,000 properties meet the fair market value thresholds for the tax. The notices sent by the city would then represent “an absurdly high percentage” of secondary homes, the suit claims.

The suit is asking the court to declare that homeowners who received notices do not have to appeal by Sept. 18. It also asks for a list of over 900,000 home addresses to be removed from the Department of Finance website.

On July 24, the DOF published the list of addresses describing it as “related to” the surcharge. The website was later updated to clarify that the list contained all properties in the borough, regardless of their value and primary residence status, and then again later clarified on the site that “the vast majority of properties and units listed in the roll will NOT be subject to the surcharge,” according to the complaint.