Appellate Panel Overturns Lower Court Order
Four justices of the New York Supreme Court's Appellate Division on Wednesday overturned a lower court order that would have forced the city to scrap its rollout of the pied-à-terre surcharge, remove a supplemental roll listing 900,000 properties and nullify notices sent to potentially eligible homeowners, The Real Deal reported.
The panel ruled that petitioners in the underlying suit, including Kenneth Fishel of Renaissance Properties, lack standing because they were not injured by appearing on the list or receiving notices. The judges also noted that the supplemental roll is similar to assessment rolls published annually by the Department of Finance and that taxpayers regularly incur time, effort and costs to comply with their annual obligations outside of the surcharge, even though petitioners did not quantify any costs, The Real Deal reported.
Former Deputy Mayor Randy Mastro, who represents petitioners in the suit, had argued that receiving notices and appearing on the list amounted to harm because of the resources required to secure exemptions, which all of his clients ultimately received. 'It's a shame that, after the City admittedly botched the rollout of this surcharge, the court today took the procedural offramp of standing to avoid addressing the merits of this case,' Mastro said in a statement published by The Real Deal.
Exemptions Shrink Universe of Taxable Properties
Department of Finance exemptions have shrunk the universe of properties potentially eligible for the tax to fewer than 9,000 homes, with more appeals likely on the way when the Tax Commission hears cases, The Real Deal reported.
The reduction from an initial list of 900,000 properties reflects the city's process of granting exemptions to owners who demonstrated that the property is their primary residence or otherwise does not meet the surcharge criteria. Mastro criticized what he called a 'lawless and chaotic data collection scheme' that required thousands of people to prove they live in their own homes or else face the surcharge, according to his statement.
For owners who received notices and have not yet applied for an exemption, the appellate decision means the city's process remains in effect. The surcharge applies to non-primary residences: condos and co-ops with a DOF market value above $1 million and one- to three-family houses above $5 million. Owners should verify their property's status using the Department of Finance records and file for an exemption if they believe they qualify.
Mayor Mamdani Defends Rollout, Constitutional Challenges Remain
'Today, an appeals court rejected an attempt by the ultrawealthy to avoid paying their fair share and ruled in favor of the City in a lawsuit challenging the rollout of the pied-a-terre surcharge,' Mayor Zohran Mamdani said in a statement reported by The Real Deal. 'From day one, those with the most have attempted to use every legal avenue available to shield their wealth and avoid contributing more to our city.'
Mastro also represents plaintiffs in a concurrent suit filed in Suffolk County that challenges the surcharge on constitutional grounds, The Real Deal reported. Another challenge brought by developer Steve Wynn and former commerce secretary Wilbur Ross does not feature Mastro as its lawyer but makes similar claims.
Mastro plans to pursue the constitutional avenue to challenge the surcharge, arguing that the 'ultimate day of reckoning' for the surcharge will happen next month when that case is decided. 'We remain confident we will prevail and put an end to this unconstitutional surcharge altogether,' he said in a statement published by The Real Deal.
Mamdani said the administration will continue working with partners in Albany to defend the law against ongoing challenges in Suffolk County, brought by 'some of the same uberwealthy interests whose arguments just lost in court today,' according to his statement.
What Second-Home Owners Should Do Now
The appellate decision leaves the city's surcharge process intact. Owners of non-primary residences over the thresholds (condos and co-ops with a DOF market value above $1 million; one- to three-family houses above $5 million) should expect to receive a surcharge bill unless they have secured an exemption.
If you received a notice and believe your property qualifies for an exemption because it is your primary residence, you rent it out under a qualifying lease, or another exemption applies, you should file an application with the Department of Finance or appeal to the Tax Commission. The court's decision does not extend or reset any filing deadlines that may apply to your property.
Check whether your property appears on the Department of Finance's pied-à-terre list and review your exemption status using our free address checker at piedaterretax.nyc. The tool shows your property's current status and explains the next steps if you need to file for an exemption or appeal.
Frequently asked questions
Does the appeals court decision mean I still have to pay the pied-à-terre tax?
Yes, the appellate decision leaves the city's surcharge process intact. Owners of non-primary residences over the thresholds (condos and co-ops with a DOF market value above $1 million; one- to three-family houses above $5 million) should expect to receive a surcharge bill unless they have secured an exemption.
How many properties are actually subject to the pied-à-terre surcharge now?
Department of Finance exemptions have shrunk the universe of properties potentially eligible for the tax to fewer than 9,000 homes, down from an initial list of 900,000 properties. More appeals are likely when the Tax Commission hears cases.
What should I do if I received a pied-à-terre tax notice but this is my primary residence?
If you received a notice and believe your property qualifies for an exemption because it is your primary residence, you should file an application with the Department of Finance or appeal to the Tax Commission. The court's decision does not extend or reset any filing deadlines that may apply to your property.