Appeal Panel Presses City on Data and Methodology
A three-judge appellate panel questioned New York City's lawyers Wednesday on whether the Department of Finance used the most recent tax-return data available before sending pied-à-terre surcharge notices to more than 17,000 homeowners, according to The Real Deal. The city is appealing a September ruling by Staten Island Justice Wayne M. Ozzi that ordered officials to nullify the notices and restart the rollout, calling the process arbitrary and capricious.
Executive Assistant Corporation Counsel for Appeals Richard Dearing told the Second Department panel that the Department of Finance saw urgency in sending notices and later sought access to 2025 tax returns, The Real Deal reported. Justice Francesca Connolly asked whether the agency must be given leeway in its methodology, questioning whether statute language requires use of only the most recent tax information.
Randy Mastro, the former deputy mayor now representing homeowners challenging the rollout, argued the city captured too broad a group of property owners and relied on 2024 tax-return data when more current information should have been used, according to The Real Deal. He told the panel the mailed notices placed a burden on primary residents who had to submit sensitive financial documents to prove exemption eligibility.
Exemptions Granted to More Than 8,800 Properties
The Department of Finance has granted more than 8,800 of roughly 11,000 exemption applications, leaving fewer than 9,000 properties subject to the surcharge, according to figures City Hall provided to Gothamist. The number of potentially taxable homes has dropped from the initial list of more than 17,000 that received notices.
Mayor Zohran Mamdani told WNYC Thursday he remains confident the city will collect $500 million from the tax despite the rising exemption count, Gothamist reported. In April, city Comptroller Mark Levine had estimated the tax would generate only up to $380 million from roughly 11,200 homes, according to Gothamist.
Attorney Ben Williams of Rosenberg & Estis told Gothamist the city has not adjusted its $500 million projection despite the exemptions. He said he is curious whether the city will raise the tax rate in the future if revenue falls short of the target.
Justices Question Whether Notices Constitute Final Agency Action
The appellate panel appeared receptive to the city's argument that the mailed notices do not amount to a final agency action subject to legal challenge, The Real Deal reported. Justice Phillip Hom asked Mastro how the broad supplemental roll of 900,000 properties the DOF published differs from annually published property-tax assessment rolls from a privacy perspective.
Mastro argued the overinclusive notices were intended to ensnare people into paying the tax if they failed to apply for an exemption, placing a burden that should first be determined by DOF with a single targeted final list, according to The Real Deal. Justice Mark Dillon questioned whether the exemption process amounts to another layer of annual settlement with the government, likening it to the regular income-filing process.
Dearing said concerns about requiring homeowners to submit sensitive tax-return documentation are ungrounded absent any threat from the agency to disclose that information publicly, citing DOF's longstanding privacy safeguards, The Real Deal reported. He said the surcharge is having its first year but the department has handled sensitive documents in other programs for years.
Advocates Rally Outside Court as City Defends Implementation
Queens lawmakers and advocates rallied outside the Brooklyn courthouse Wednesday in support of the tax, calling legal pushback a temper tantrum by wealthy property owners, the Queens Daily Eagle reported. Assemblymember Diana Moreno said it is interesting to hear complaints about proving residency when working New Yorkers routinely must prove income to receive basic food and health benefits.
Samantha Kattan, the Democratic nominee for the 37th Assembly District, told the Eagle the $500 million the tax would raise is not even close to the total amount needed to fund services working-class New Yorkers need, citing tens of thousands of people in the shelter system and crumbling transit and schools.
Corporation Counsel Steven Banks said at a New York Law School panel Tuesday that the stay of Ozzi's order was necessary to keep implementation on track, noting several hundred million dollars are at stake and needed to address a generational budget deficit inherited in January, The Real Deal reported. The city is banking on the appellate freeze to avoid costly disruptions to its taxation process.
What Second-Home Owners Should Watch
The appellate panel has not announced a timeline for its decision on whether to uphold or overturn Ozzi's September ruling. If the lower court's order stands, the city would be required to void all notices sent to date and restart the rollout with a narrower, more targeted list of properties.
Owners who received a notice and have not yet applied for an exemption face a deadline to submit 2025 tax returns and residency documentation to DOF. The exemption portal remains open while the appeal proceeds under the stay granted by the appellate court.
Three separate legal challenges to the pied-à-terre tax are working through the courts, Gothamist reported. A second lawsuit filed by billionaire casino mogul Steve Wynn and former Trump Commerce Secretary Wilbur Ross argues the state law discriminates against wealthy nonresidents. Owners of high-value properties should monitor both the constitutional challenge and the implementation dispute as the city moves toward final billing in early 2027.
Check whether your property received a notice — and whether an exemption was granted — using our free address look-up tool. The tool draws on DOF public records and is updated as new exemption data becomes available.
Frequently asked questions
How many properties are still subject to the pied-à-terre tax after exemptions?
Fewer than 9,000 properties remain subject to the surcharge after the Department of Finance granted more than 8,800 exemptions out of roughly 11,000 applications. The number of potentially taxable homes has dropped from the initial list of more than 17,000 that received notices.
What did the appellate court question about the city's pied-à-terre tax rollout?
The three-judge appellate panel questioned whether the Department of Finance used the most recent tax-return data available before sending notices to more than 17,000 homeowners. The court is reviewing a September ruling that ordered the city to nullify the notices and restart the rollout, calling the process arbitrary and capricious.
How much revenue does the city expect to collect from the pied-à-terre tax?
Mayor Zohran Mamdani said he remains confident the city will collect $500 million from the tax despite the rising exemption count. In April, city Comptroller Mark Levine had estimated the tax would generate only up to $380 million from roughly 11,200 homes.