New York City’s pied-à-terre tax on luxury second homes has hit a roadblock over the publication of a list of hundreds of thousands of residences in the city.
A Staten Island judge ruled Tuesday that the previously published list of New York City residences should be removed. Instead, the Department of Finance, or DOF, may replace that lengthy list of residences with a roll showing properties actually subject to the tax. Further, mailed tax notices to homeowners who were potentially facing the tax are to be canceled and replaced with notifications to the properties actually affected.
“No crime is involved here, but homeowners are being substantially harmed and penalized needlessly by DOF’s method of implementing the Tax Law,” Justice Wayne M. Ozzi wrote.
The ruling came after a group of New York homeowners sued over the rollout of the tax, which they say caused “mass confusion” and “facilitated, invited, and amplified unwanted scrutiny of homeowners’ personal information.” That controversial rollout is what Ozzi targeted in his ruling, with the judge saying that mailed notices “irresponsibly and unnecessarily caused homeowners to expend time and money,” and that the DOF “unfairly shifted the burden to thousands of homeowners to prove their basic residency.”
The pied-à-terre tax launched an NYC legal saga
Today’s ruling builds on a fiery legal back-and-forth over the pied-à-terre tax. The city’s Department of Finance sent 17,000 letters to homeowners who could be on the hook for the tax in late July. The DOF also published 900,000 addresses, homeowner names, and property values.
A judge temporarily blocked the further rollout of the tax on August 10, ordering the city to take down the list of addresses and halt any deadline enforcement. Homeowners previously had a deadline of September 18 to appeal their city-calculated property value or prove that the home is their primary residence.
The three NYC homeowners at the center of the suit — residents of Staten Island and Manhattan — said they were distressed by receiving letters and finding their names appeared on the public database.
Other New Yorkers took to social media or joined testimony at a recent City Council hearing to air concerns about the tax. Local lawmakers told Business Insider that they have been flooded with questions from constituents about the city’s property list.
On top of Tuesday’s ruling, a fresh suit against the tax brought on Monday by Florida-based New York property owners — former Secretary of Commerce Wilbur Ross Jr., his wife Hilary, and businessman Stephen Wynn — argues that the tax is unconstitutional both in New York and federally.
The Mayor’s Office said the tax will raise $500 million annually to support Mamdani’s affordability agenda. The administration hired two dozen additional staffers to handle appeals and residents’ questions about the rollout.
The tax itself will be progressive, applying to non-primary homes valued by the DOF at least $5 million and condos and co-ops valued at least $1 million. The surcharge begins at 0.8% and increases to 1.3% for properties valued at $25 million or more.
Per Business Insider’s math, Citadel CEO and Miami resident Ken Griffin is set to shell out between $1.3 million and $1.4 million for his Central Park South apartment. Celebrities and billionaires like Donald Trump, Jeff Bezos, Jay-Z, and Beyoncé are also likely to be subject to the levy.
Attorneys and real estate agents who spoke with reporter James Rodriguez said the tax leaves high-net-worth homeowners with few options for workarounds. Unless they have an immediate family member move into the address, or can successfully prove their property is worth less than the city’s estimation, wealthy quasi-New Yorkers shouldn’t bank on an exemption.
Now, unless the city successfully argues for a stay, it might have to go back to the drawing board on the tax’s rollout.
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