Less than three months after its approval, the new New York luxury second houses tax is already at the centre of a judicial battle. Yesterday, on Monday, August 10, a judge of the State Supreme Court of Staten Island ordered the city to temporarily suspend certain procedures related to the pied-à-terre tax, after the appeal submitted by three owners who claim to have been improperly involved. The city appealed and the matter will return before the judge on 31 August.
The fee is formally defined non-primary residence property surcharge and is an additional annual tax on some high-value housings that are not used as the main residence. The French term pied-à-terre, with which it is commonly indicated, is used in New York especially for apartments owned by people who have their own main residence elsewhere and use them only for a part of the year.
The new tax was introduced in 2026. For tax years 2026-27 and 2027-28 it can be applied to houses from one to three families with a market value attributed by the Department of Finance greater than 5 million dollars and apartments in condominium (condo) and in real estate cooperatives (co-op) valued at least one million dollars. It does not apply, in general, if the house is the main residence of the owner, a narrow family or a tenant; specific rules are also provided for properties belonging to companies and trusts.
For houses from one to three families the rate starts from 0.8 percent of the market value between 5 and 15 million dollars, rises to 1.05 percent between 15 and 25 million and arrives at 1,3 percent over 25 million. Different thresholds and rates are provided for condo and co-op.
The problem that led to the cause concerns the way the city began to identify the properties concerned. On 24 July, the Department of Finance published a supplemental market value roll, a list that includes potentially property subject to the new tax but, as the department specifies, even real estate that may not be. At the same time, about 17 thousand communications were sent to the owners, inviting them to check their position and submit the necessary documentation to obtain the exemption if the house was actually a main residence.
Three of the owners who received such communication decided not to follow this procedure and turned to the Supreme Court of Staten Island. They do not dispute only the possible application of the tax to their homes: they argue that the procedure used by the city is wrong to identify the taxpayers. According to their use, the Department of Finance should have used the information already available in the tax registers to check in advance what properties were actually second homes, instead of including major homes and letting the owners charge to prove that they were entitled to exemption.
There is also an administrative procedure to challenge the application of the surcharge in front of the New York City Tax Commission. The cause of the three owners has a different objective: to obtain the intervention of a judge on the method used by the Department of Finance as a whole, including the publication of the list of potentially involved properties.
On Monday, Judge Wayne Ozzi temporarily accepted their request and ordered the city to stop some of the procedures and remove the list from the Department of Finance website. The measure does not declare illegitimate the pied-à-terre tax: it suspends a part of its application waiting for the court to examine more in depth the disputes of the owners. The city immediately reacted by appeal.
The tax had been presented by the Mamdani administration as a way to obtain new revenue from the owners of high-value properties that mainly live outside the city. The forecast included in the budget is about 500 million dollars a year. An analysis published by the Comptroller before the entry into force had estimated a higher theoretical jet, but also pointed out that the exemptions for the main housing would significantly reduce the actual figure.
The litigation opened in Staten Island concerns the difficulty underlying the new tax. The value of a property is already registered by the Department of Finance; to determine whether the owner really lives there is more complicated, especially when the property belongs to a trust or a company. Of the approximately 17 thousand owners who had received a communication, at the beginning of August approximately 3,800 had already submitted a request for exemption.
On 31 August, the court must therefore take care not so much of the existence of the tax, but of the way in which New York decided who might be required to pay it.
L’articolo New New New York Luxury Homes Tax is already over in court proviene da IlNewyorkese.
