A Brooklyn appellate judge cleared the Mamdani administration to continue rolling out New York City’s new pied-à-terre tax on August 13, lifting a temporary restraining order that a Staten Island court had issued just three days earlier and setting up an August 31 hearing that will determine whether the city’s implementation survives judicial review.
Key Takeaways
- Judge Philip Hom of the Appellate Division, Second Department, stayed the temporary restraining order issued by Staten Island Supreme Court Justice Wayne Ozzi, allowing the city to proceed with the tax rollout while its appeal is pending.
- The pied-à-terre tax applies to non-primary residences valued above $5 million for one-to-three-family homes and above $1 million in assessed value for condos and co-ops, with surcharge rates ranging from 0.8% to 6.5% depending on property type and value.
- The NYC Comptroller projects the surcharge will generate approximately $500 million annually for the city.
- Attorney Randy Mastro, a former first deputy mayor, filed the lawsuit on August 7 on behalf of homeowners who argue the city published a list of 900,000 properties and mailed notices to 17,000 owners without making the required individual property determinations under the statute.
- Oral arguments on whether the original restraining order should stand are scheduled for August 31 at 2:15 p.m.
Appellate Ruling Resolves Three Days of Legal Confusion
The sequence of events between August 10 and August 13 moved at an unusual pace for New York real estate litigation. On August 10, Justice Wayne Ozzi of the Richmond County Supreme Court issued a temporary restraining order requiring the city to take down the supplemental roll of 900,000 properties from the Department of Finance website, halt further enforcement actions tied to the mailed notices, and suspend the September 18 deadline for exemption applications. The ruling came in response to a lawsuit filed three days earlier by attorney Randy Mastro, who previously served as first deputy mayor under Rudy Giuliani, on behalf of three homeowners.
The city’s Corporation Counsel, Steven Banks, immediately filed a notice of intent to appeal to the Appellate Division, Second Department. That filing triggered a procedural dispute over whether the appeal automatically stayed Justice Ozzi’s order. In an August 11 letter to the Staten Island court, Mastro argued that most of the judge’s restrictions remained in effect and warned that the city would be in contempt if it continued pressing ahead with implementation. The Mamdani administration took the opposite position: that the appeal stayed the TRO, and rollout would proceed.
Judge Philip Hom resolved that standoff on August 13 by confirming that Ozzi’s order is stayed while the city’s appeal is pending. Hom also granted the city permission to formally appeal the original decision. The ruling means the Department of Finance can continue processing exemption applications, maintaining its published property list, and enforcing the September 18 filing deadline, at least through the end of August.
The Lawsuit Challenges Implementation, Not the Tax Itself
The distinction at the center of this litigation is procedural, not constitutional. Mastro’s lawsuit does not argue that the pied-à-terre tax is unlawful. The challenge targets how the city rolled it out.
Under the statute enacted as part of the FY 2026-27 state budget on May 28, the Department of Finance is required to make an initial determination for each property that it is not a primary residence before imposing the surcharge. The plaintiffs argue that the city skipped that step entirely. Instead of making individualized determinations, the DOF published a supplemental market value roll of approximately 960,000 properties on its website and mailed notices to roughly 17,000 owners stating they “may be subject” to the tax. That approach, the lawsuit contends, effectively shifted the burden onto property owners to prove their own exemption rather than requiring the city to establish liability first.
The numbers underscore the scope of the rollout’s reach. An independent analysis of the DOF’s published data found that of the 959,710 properties listed, only about 24,222, roughly 2.5%, actually have assessed values above the surcharge thresholds. The remaining 97.5% cannot owe the surcharge at their current valuations, but their inclusion on the public list and in some cases the receipt of official city notices created confusion and alarm among full-time homeowners who were never intended targets of the tax.
Rate Structure Targets Luxury Second Homes Across Two Phases
The pied-à-terre surcharge operates on a tiered rate structure split into two implementation phases. During Phase 1, which runs from July 1, 2026, through June 30, 2028, condominiums and cooperative units with a Department of Finance market value above $1 million face surcharge rates between 4% and 6.5%, depending on the assessed value bracket. One-to-three-family homes valued above $5 million face rates between 0.8% and 1.3%.
The surcharge is applied to the property’s full assessed value once it crosses the threshold, not just the amount above the threshold. That calculation method means the effective cost rises steeply at each bracket line. The median potential annual bill for affected properties runs above $50,000, according to analysis of the DOF’s published data.
Phase 2, beginning July 1, 2028, transitions all property types to a uniform comparable-sales valuation methodology and standardizes the threshold at $5 million across the board. The surcharge is currently set to expire on June 30, 2031, unless the legislature renews it.
The first surcharge charges will appear on property tax bills due January 1, 2027. No existing abatement, credit, or exemption that a property owner currently receives will offset the surcharge amount.
The August 31 Hearing Will Shape the Tax’s Immediate Future
The procedural win on August 13 does not end the legal threat to the city’s rollout. When the case returns to Justice Ozzi’s courtroom on August 31, the city will need to demonstrate that its implementation followed the statutory requirements. That means showing that the mailed notices constituted proper notice under the law, that the publication of the 900,000-property list did not violate required procedures, and that the DOF’s actions were not arbitrary or in excess of its legal authority.
Mastro has signaled that the homeowners will seek permanent relief at that hearing. Legal analysis of the case notes that until the litigation is resolved, owners should not assume the surcharge will never be collected, even if the TRO had remained in place. The underlying law remains valid regardless of the procedural challenge.
The Mamdani administration has treated the tax as a centerpiece of its fiscal strategy. When the mayor announced the initial notification process on July 23, he framed the surcharge as a direct response to the city’s budget gap, funding for parks, schools, and libraries drawn from luxury second-home owners rather than cuts to city services. The Department of Finance hired 13 additional staff to administer the program and 11 additional positions at the Office of Administrative Tax Appeals to handle the expected volume of contests and exemption requests.
With the appellate stay now in place, the city’s implementation clock is running again. Property owners who received notices have until September 18 to submit documentation proving their property is a primary residence. The exemption application process, available through the DOF’s dedicated portal at nyc.gov/npsurcharge, remains open and active.
FAQs
Who Is Subject to the NYC Pied-à-Terre Tax?
The surcharge applies to owners of New York City residential properties that do not serve as a primary residence. For one-to-three-family homes, the threshold is a Department of Finance valuation above $5 million. For condominiums and cooperative units during Phase 1 (July 2026 through June 2028), the threshold is a DOF market value above $1 million, which the DOF states is generally comparable to a single-family home valued at $5 million or more under the current assessment system.
What Is the Deadline to Apply for an Exemption?
Property owners who received a notice from the Department of Finance have until September 18, 2026, to submit documentation proving that the property in question is their primary residence. The original deadlines fell on several dates at the end of August, but Mayor Mamdani and DOF Commissioner Richard Lee extended the uniform deadline on August 1. Applications can be submitted through the DOF’s online portal at nyc.gov/npsurcharge.
What Happens at the August 31 Court Hearing?
Justice Wayne Ozzi of the Richmond County Supreme Court will hear oral arguments on whether to make the temporary restraining order permanent. The city must demonstrate that its implementation, including the mailed notices and published property list, followed the procedures required by the statute. The homeowners’ attorney, Randy Mastro, is expected to seek permanent relief blocking the rollout. The outcome will determine whether the city can continue processing the surcharge or must overhaul its approach.
