The Municipality of New York must remake the procedure with which it identified the owners called to pay the new tax on second luxury houses. He established it on Tuesday 29 September Wayne M. Ozzi, Judge of the Supreme Court of State in Staten Island, accepting the appeal of a group of owners. The decision concerns the way Mayor Zohran Mamdani’s administration applied the tribute, whose validity remains intact. The Municipality has immediately appealed, suspending the effects of the order pending the subsequent judicial steps.
The problem arises from the approximately 17 thousand communications sent during the summer by the Department of Finance, the municipal office that deals with revenue. The letters warned the owners that their properties could be subject to the tax and asked to document a possible exemption. Among the recipients, however, there were also people who lived permanently in the indicated homes and who therefore should not have paid it.
According to Ozzi, the municipality should have used its tax data better before sending notices. The procedure had instead transferred on the owners the burden of showing that they lived in their own homes, forcing some to turn to accountants or lawyers to prove a condition that the administration could verify independently.
The measure is known as pied-à-terre tax, from the French expression also used in the United States to indicate a house used during occasional stays. Proposed in spring by Governor Kathy Hochul and approved in the state budget, it was supported by Mamdani as a first implementation of the electoral promise to increase the contribution of the wealthiest to city finances. The administration plans to obtain approximately $500 million a year to finance services and reduce deficit.
For the first two years, the suprattassa covers the houses with one, two or three housing units evaluated by the municipality over 5 million dollars and apartments in condominium or cooperative with an assessment of at least one million. They are values determined by the Department of Finance, which do not necessarily coincide with the purchase prices: for the apartments a method different from the one used for independent houses is applied. In general, the properties used as the main house by the owner, a tenant or a close family are exempt.
The appeal also covered a list published online by the Municipality, containing almost one million properties and the names of the owners. Comparison on the list did not mean having to pay the fee, as the Department of Finance itself states on its website. Ozzi ordered to replace it with a limited list of properties actually subject to the tax. He also ordered the cancellation of the letters already sent and the shipment of new notices, accompanied by the information used to establish the obligation to pay.
The administration defends the procedure and claims that demonstrating the use of a property as the main home is simple, even when the property is registered with a company or trust. It had already extended from 18 September to 6 October the deadline for submitting the documentation: at 16 September it had accepted the requests of about 4,700 owners and was examining thousands more.
The dispute could complicate the time of collection. The first bills are normally sent to November and the calendar published by the Municipality provides for the charge of the surcharge in the real estate bill expiring on January 1, 2027. If the order of Ozzi is confirmed, the offices should repeat the checks and send new communications in a few months.
In the meantime, two other proceedings have been opened which dispute the legitimacy of the tax itself. The first was presented on Monday in Suffolk County by former US Trade Secretary Wilbur Ross, wife Hilary Geary Ross and casino entrepreneur Steve Wynn. All three live in Florida and have second homes in New York. According to the amounts reported in the appeal, the Ross should pay approximately 83 thousand dollars and Wynn about 183 thousand.
The second appeal was presented on Tuesday by the owner of Montclair, a cooperative building on the Upper East Side, and by some owners. Both cases argue, among other things, that the tribute violates constitutional limits to the collection of real estate taxes and discriminates non-residents. Hochul and Mamdani announced they will defend the measure in court. The municipality must therefore face two distinct issues: to demonstrate that it has correctly identified who has to pay and defend his right to collect the tax.
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